Vancouver Island Highway Project: Planning and Design

Auditor General

of British Columbia

OFFICE OF THE

Vancouver Island

Highway Project:

Planning and Design

Ministry of Transportation

and Highways

1996/1997

:Report 3

Performance Audit

LOCATION:

8 Bastion Square

Victoria, British Columbia

V8V 1X4

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In Vancouver dial 660–2421

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Further information and reports at:

http://www.aud.gov.bc.ca/

Auditor General

of British Columbia

OFFICE OF THE

Canadian Cataloguing in Publication Data

British Columbia. Office of the Auditor General.

Vancouver Island Highway Project : Planning and design

(Report ; 1996/97: 3)

“Performance audit.”

ISBN 0-7726-3073-9

1. Vancouver Island Highway Project - Evaluation. 2. British Columbia. Ministry

of Transportation and Highways - Evaluation. 3. Highways planning - British

Columbia - Evaluation. 4. Roads - Economic aspects - British Columbia.

II. Title. II. Series: British Columbia. Office of the Auditor General. Report;

1996/97: 3.

TE27.B7B74 1996 388.1’1’097112 C96-960360-6

1996/97 Report 3: Vancouver Island Highway Project: Planning and Design

Auditor General of British Columbia

Auditor General’s Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1

Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3

Audit Purpose and Scope . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5

Overall Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6

Key Findings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6

Detailed Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11

Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13

Assessment of Designs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23

Highway Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27

Design Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33

Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39

Ministry Response . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .47

Appendices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .49

A 1996/97 Audit Reports Issued to Date . . . . . . . . . . . . . . . . . . . . . . . . .51

B Office of the Auditor General: Audit Objectives and Methodology

for Performance Auditing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .52

table of contents

1996/97 Report 3: Vancouver Island Highway Project: Planning and Design

Auditor General of British Columbia

This report is my third report to the

Legislative Assembly for the 1996/97 year. It

provides the results of my Office’s performance

audit of the Vancouver Island Highway Project,

a $1.3 billion upgrade to the Island Highway

corridor between Swartz Bay (north of Victoria)

and Campbell River. Our audit looked at the

facility planning and design phases of the

project, as decisions made during these phases—

particularly during facility planning—determine

the bulk of the capital costs of the highway, and

significantly affect its lifecycle costs.

Since 1987, there have been a number of

reports dealing with large highway projects in

British Columbia. One of them, released in that

same year, the Report of the Commissioner Inquiry

into the Coquihalla and Related Highway Projects by

Douglas L. MacKay, was highly critical of the

way the Ministry of Transportation and Highways planned,

managed, and reported on major highway construction

projects. Commissioner MacKay found that there was no

comprehensive long-range highway capital plan, the selection

of projects was not based on objective criteria, and highway

planning was not integrated with overall transportation

planning.

Following that report, the ministry undertook to

improve the way it managed capital projects by employing

the “proven project management practices” recommended

by MacKay. It also initiated a province-wide inventory and

evaluation of all modes of transportation, and announced

the “Freedom to Move” transportation planning process.

In 1990, my Office conducted an audit of the ministry’s

process for managing major capital projects, focusing on the

steps that the ministry had taken to implement the project

management principles and practices to which it had

committed itself. We found that the ministry had significantly

improved the way it managed capital projects, but that it

needed to make additional improvements before it would

be able to ensure that it was getting good value for money

on capital projects.

In 1991, we conducted an audit of highway planning.

Our report noted that the ministry had introduced new

planning and budgeting processes, but that the new

processes did not yet meet a reasonable standard for

ensuring that good value is achieved from highway capital

auditor general’s comments

expenditures. The processes were, however, significantly

better than previous ones and efforts were being made to

make further improvements.

In this audit, which we conducted in early 1996, we

assessed what the ministry has done to ensure that its

planning and design processes for the Vancouver Island

Highway provide good value for the money spent. The

decisions taken at this stage of the capital project drive the

lifecycle cost of the highway that is ultimately built.

I wish to thank the Ministry of Transportation and

Highways staff, and other government personnel, for the

cooperation and assistance provided to my audit staff

during the course of their work on this audit.

George L. Morfitt, FCA

Auditor General

Victoria, British Columbia

November 1996

Auditor General of British Columbia

1996/97 Report 3: Vancouver Island Highway Project: Planning and Design

highlights

1996/97 Report 3: Vancouver Island Highway Project: Planning and Design

Auditor General of British Columbia

An audit of the planning and design of the Vancouver Island Highway Project

For any highway capital project, planning and design

decisions determine what will be built, where it will be

built, when it will be built—decisions that effectively

determine most of the cost of, and cash flow required for,

building the highway.

The Vancouver Island Highway Project is a $1.3 billion

upgrade to the Vancouver Island Highway corridor, including

both upgrading existing highway and new construction,

between Swartz Bay (north of Victoria) and Campbell River.

To ensure that the highway eventually constructed will

provide good value for money, it is important that the

planning and design processes in place for this project

are appropriate and are followed.

Audit Purpose and Scope

The purpose of this audit was to assess whether the

Ministry of Transportation and Highways has taken

appropriate steps to ensure that the designs for the

Vancouver Island Highway provide good value for money.

“Appropriate steps” include:

■ planning and design management processes which

provide reasonable assurance that needs are identified

and designs developed to address those needs in a cost-

effective manner; and

■ a suitable framework of technical standards within which

the planning and design processes occur.

We looked mainly at the period since November 1988,

when the Minister of Transportation and Highways

announced that the government would upgrade the

highway, and that the project would be completed by 1996.

This announcement signaled the beginning of the project as

it exists today.

Our audit focused on the planning and design of

specific sections of the project. We did not review the

broader issues of transportation planning, or the decision

of the government to make upgrading the Vancouver Island

Highway its number one highway capital priority in 1988.

Our examination was performed in accordance with

value-for-money auditing standards recommended by the

Vancouver Island Highway

Project: planning and design

Auditor General of British Columbia

1996/97 Report 3: Vancouver Island Highway Project: Planning and Design

Canadian Institute of Chartered Accountants, and accordingly

included such tests and other procedures as we considered

necessary in the circumstances.

Overall Conclusions

We concluded that the designs for the Vancouver Island

Highway will provide good value for money within the

context of current ministry standards and guidelines.

Although there was insufficient planning during early

phases of the project, the Vancouver Island Highway Project

team has addressed most of the deficiencies during the

subsequent planning and design phases. The team has

also developed appropriate design management processes,

including an adequate Quality Management program.

The ministry’s planning and design standards, including

guidelines for establishing functional classification of

highways, are generally adequate. However, we believe the

ministry would benefit from reviewing these standards and

their application to ensure that they promote cost-effective

planning and design decisions.

Key Findings

The ministry established an appropriate organizational structure

and project management processes to deliver the Vancouver Island

Highway Project

The ministry set up a separate project team, within

the Major Projects Branch, to deliver the Vancouver Island

Highway Project. It also established a joint venture with

UMA Engineering Ltd., a private sector firm, for the

management of the project. Ministry employees work with

UMA employees in an integrated fashion. This arrangement

has provided the ministry with access to private sector

project management tools, while at the same time developing

the project management skills of ministry employees.

The ministry also created a Project Management

Committee and a Technical Review Committee to facilitate

communications between the Vancouver Island Highway

Project and the rest of the ministry. The Project Management

Committee was established to deal with policy and project

scope, schedule, and budget issues. The Technical Review

Committee was established to deal with proposed variances

from design standards and other technical issues.

In 1991, the ministry commissioned a firm of project

management consultants to conduct a management audit

of the Vancouver Island Highway Project. The consultants

concluded that, in general terms, the project was being well

managed, although they made a number of suggestions for

1996/97 Report 3: Vancouver Island Highway Project: Planning and Design

Auditor General of British Columbia

improvements. In 1994, the same consultants were asked to

assess progress and to review some additional areas not

covered in the original audit. Again they confirmed that the

Vancouver Island Highway Project was functioning well.

They made a number of recommendations, including

implementation of a Value Engineering program. The

ministry acted on many of these recommendations, including

the implementation of a Value Engineering program.

The designs for the Vancouver Island Highway Project will provide

adequate value for money

The audit included a review of the results of the

planning and design processes for a number of project

segments. The project segments selected included both

bridges (stream crossings and grade separations) and

highway segments that were at different stages of completion,

and in different parts of the project. To help us in assessing

the appropriateness of the designs and to evaluate whether

they would provide value for money, we contracted the

services of technical experts in highway design.

We found that the designs we reviewed provide

adequate value for money within the context of current

ministry standards and guidelines. The designs were

developed in accordance with the established design criteria,

and satisfied the project objectives. Technically and

functionally, they are consistent with the established criteria

that govern highway or bridge design and, when necessary,

any significant departures from those criteria were adequately

investigated, explained, and documented.

For all the project segments we reviewed, alternatives

were developed and evaluated during the planning and

design process. On one of the project segments, two of the

design criteria—functional classification and design speed—

were amended following preliminary design studies, when

it was recognized that the project segment, as originally

planned, would result in significant overcapacity.

However, an adequate capital management program

requires that design alternatives be compared using

estimated lifecycle costs as well as expected performance

of each alternative. We found that only limited attention

was given to lifecycle costs during development of designs.

Earlier Value Engineering reviews conducted on the project designs

might have resulted in better value for money

Value Engineering is a formal, organized procedure

for reviewing a project in order to identify alternatives that

can provide a more cost-effective product without reducing

performance or reliability.

Auditor General of British Columbia

1996/97 Report 3: Vancouver Island Highway Project: Planning and Design

Value Engineering studies were carried out as part of

a pilot project in 1995. The studies indicated that the designs

of the sample of the project segments included in the pilot

project provide adequate value for money. The project team

implemented a number of recommendations made as a

result of the studies, and has incorporated other suggestions

into the project’s planning and design processes.

Although the studies also identified other potential

savings opportunities, these were not explored because the

studies were, for the most part, conducted at a late stage of

design and the costs of redesign were prohibitive, public

commitments had been made, or fiscal year spending targets

made delay unattractive. Conducting Value Engineering

studies earlier in the planning and design process would

have permitted consideration of a broader range of

recommendations. The pilot project committee recognized

this fact and indicated that Value Engineering studies

should be conducted during preliminary design, before

public information sessions are conducted, and then again

later in the process but before commitments are made to

major design features.

System planning was incomplete when the project was announced

System planning is planning for the highway network

of the province as a whole or of a region (such as Vancouver

Island). Its purpose is to ensure that the province’s system

of highways is developed in a logical and coherent manner,

balancing transportation needs throughout the province

with resources available for development. The need for

good planning was emphasized in the 1987 Report of the

Commissioner Inquiry into the Coquihalla and Related

Highway Projects.

In the 10 years before the announcement of the

Vancouver Island Highway Project in 1988, a number of

studies called for improvements to the Vancouver Island

Highway, based on safety and traffic volume concerns.

These studies were not sufficiently detailed—from an

engineering point of view—to permit accurate estimates of

the costs of alternative improvement options. The 1988

project announcement, however, created a public expectation

that the project would have certain features (such as a

freeway to north of Campbell River), even though sufficient

planning had not yet been done to determine what those

features might cost or whether they were necessary or

appropriate.

The scope and budget for the Vancouver Island Highway

Project has changed considerably over the life of the project.

As the project has progressed, better information about

needs, costs, and financial limitations has transformed the

preliminary cost estimate for the project from “in excess of

1996/97 Report 3: Vancouver Island Highway Project: Planning and Design

Auditor General of British Columbia

$600 million” to approximately $1.3 billion and has also

significantly affected what will actually be constructed.

A combination of public input, financial pressures, and

emerging needs has resulted in a reshaping of the scope

of the project; adding to the project in some areas, reducing

the scope of work in other areas.

The Vancouver Island Highway Project is a program

of work along a corridor. The schedule for the project was

determined more by when sections of the project were able

to be built rather than by which sections were the most

needed. Initially, insufficient consideration was given to

staging the project so that highway capacity would become

available as demand grew. However, capping of the overall

project budget and recent reviews required to meet debt

management targets have resulted in scope reductions and

the staging of some parts of the project.

Facility planning for the project is satisfactory

Facility planning is planning that determines exactly

what will be built—for example, two lanes or four lanes, an

intersection or an interchange, and so on. Despite deficiencies

in the early planning for the Vancouver Island Highway

Project, facility planning for the project has been adequate.

The planning procedures are clearly described in the terms

of reference in contracts with planning consultants, and

project management documentation describing policy and

procedures for facility planning is currently available.

Relatively little facility planning remains to be done,

with most of the major planning studies having been

completed by 1991. Project segments planned since then

include the Millstream Connector, the South Courtenay

Connector, and the South Campbell River Connector.

Public communication has been a significant element

in the planning of the project. Community liaison groups

have been established, open houses held, and information

published in newspaper advertisements and flyers. The

project team has sought to identify and balance the interests

of various groups.

Design management for the project is appropriate and adequate

Design is the detailed definition of what will be built

and how the construction process will be organized. The

Vancouver Island Highway Project’s design management

procedures are adequate. Procedures have been well

documented and are set out in the draft Implementation

Plan. The project’s design management process is similar

to that used in other jurisdictions and for other ministry

projects. Project-specific procedures are set out in the terms

of reference of each design contract.

Auditor General of British Columbia

1996/97 Report 3: Vancouver Island Highway Project: Planning and Design

The project also has an adequate quality management

program. Consultants are required to ensure adequate

quality control procedures are built into their design

processes, and Vancouver Island Highway Project design

coordinators monitor consultants to ensure that quality

control procedures are effective. Design deliverables are

reviewed by a multi-disciplinary team of Vancouver Island

Highway Project staff, and certain technical issues may be

referred for review by other ministry staff. Designs produced

by consultants are expected to meet the ministry’s current

design standards.

The ministry’s design standards are generally adequate

Ministry design standards are comprehensive, well

documented, and within the range of those used in other

North American jurisdictions. However, there are

opportunities for improvement. Lifecycle cost analysis is

not always considered in the development of standards. As

well, the current standards have been developed primarily

for rural, rather than urban, highways and do not recognize

regional variations.

In 1995, the ministry hired a consultant to review its

design standards. The consultant reported that ministry

standards were consistent with those in other jurisdictions

and that a general reduction in standards was not warranted.

However, the consultant identified some specific areas for

review. Subsequently, the ministry began a process to review

its standards with a focus on the potential for cost savings.

The results of that review have been positive, with a

number of opportunities for cost savings found.

The Vancouver Island Highway Project team has

questioned the application of ministry design standards in

specific cases, and presented proposals for variance to the

Technical Review Committee. The project team believes

that the standards are being applied too rigidly. Other

ministry staff respond that, if a viable alternative is suggested,

a variance from standards will be approved. Only limited

use is made of formal risk and cost-benefit analyses to

determine whether a request for variance should be approved.

Decisions about functional classification, design speed,

and level of service of a highway determine a large part

of the costs of a project. The functional classification of

highways, a planning decision, is guided by a manual

which indicates the type of highway that should be built to

serve specific traffic volumes at an acceptable level of service.

This guideline reflects the ministry’s policy with respect to

the level of service that will be provided to highway users,

subject to resource limitations.

1996/97 Report 3: Vancouver Island Highway Project: Planning and Design

Auditor General of British Columbia

The Vancouver Island

Highway Project

The Vancouver Island

Highway Project (Exhibit 1)

involves upgrading the existing

highway between Swartz Bay

(north of Victoria) and Parksville,

and building a new highway from

Parksville to Campbell River. In

addition to the new 125 km

highway from Campbell River to

Parksville, the project includes a

new 21 km parkway along the

western edge of Nanaimo, the

upgrading of 87 km of the Trans

Canada Highway between

Nanaimo and Goldstream Park to a

four-lane divided arterial highway,

and the upgrading of most of the

highway between Goldstream Park

and Victoria to a four-lane freeway.

A number of improvements have

also been made to the highway

between Victoria and Swartz Bay.

History of the Project:

1981–1987

In 1981, the Ministry of

Transportation and Highways

began a review of the long-term

transportation requirements of

Vancouver Island. As part of the

review, a ministry consultant

prepared a report entitled Study of

the Projected Growth of the Economy of

Vancouver Island, 1981–2001. The

consultant’s report presented an

overview of the Vancouver Island

economy, examined the role of

Vancouver Island in the context

of the economy of the province,

reflected upon industrial

development and regional growth,

and prepared population forecasts

for Vancouver Island.

At about the same time, the

ministry initiated a “Traffic Analysis

and Forecasts” project. The objective

of this project was to assemble an

inventory of Vancouver Island’s

existing transportation services

and traffic volumes, and provide

baseline traffic projections to the

year 2001. The report, published in

September 1983, projected traffic

levels for the year 2000 to increase

30–80% over 1980 levels.

In the fall of 1986, the

government announced its

commitment to a major highway

improvement program on

Vancouver Island. The following

spring, the ministry produced a

report entitled A Development

Strategy for the Vancouver Island

Highway, in which it proposed a

10–year, $511 million program of

new highway construction and

improvements to the existing

highway. The program was to

include construction of a four–lane

inland highway from Parksville to

Campbell River, a four–lane

freeway bypass around Nanaimo,

and four lanes on the existing

Island Highway between Nanaimo

and Victoria, including the stretch

of highway through Goldstream

Park. The report indicated that cost

estimates were preliminary only.

The Project Since 1988

The current project can be

traced back to announcements

made by the government in

November 1988. At that time, the

background

Auditor General of British Columbia

1996/97 Report 3: Vancouver Island Highway Project: Planning and Design

Exhibit 1

Vancouver Island Highway: Project Overview

Source: Ministry of Transportation and Highways

1996/97 Report 3: Vancouver Island Highway Project: Planning and Design

Auditor General of British Columbia

Glossary of Terms

Project scope: The scope of a highway project describes the physical characteristics of the highway or structure that will

be built, including the physical boundaries and a list of the significant elements included in the project.

Functional classification: Functional classification describes the type of highway (freeway, expressway, arterial or

secondary) theoretically required to provide an adequate level of service for a particular daily volume of traffic.

Level of service: A measure of the smoothness of traffic flow ranging from level “A”( free flow generally associated with

low density traffic) to level “F” (very high density, stop-and-go conditions, long delays).

Design year: The year established as a planning horizon.

Freeway: A divided highway with two or more lanes in each direction. Access to a freeway is via interchanges only.

Expressway: A divided highway with two or more lanes in each direction. Access to an expressway is via intersections at

public roads.

Arterial highway: A major highway of two or more lanes, not always divided, along which access roads to adjacent

private properties may be restricted.

Parkway: An urban expressway.

Intersection: A meeting or crossing of two roads at the same elevation. Through traffic, or movement from one road to

another, requires traffic on one of the roads to yield to traffic on the other, and is often controlled by traffic lights.

Interchange: A meeting or crossing of two roads, whose grades are separated (that is, there are different elevations at the

crossing point). Movement from one road to the other is accomplished by ramps and merging streams of traffic, without

traffic on either road being required to stop.

Global planning: Multi-modal transportation planning for the whole province or an area within the province (Vancouver

Island, for example)

System planning: Planning for the highway network within the province or a smaller area.

Facility planning: Planning for a specific road, section of road, interchange, intersection, bridge, tunnel, etc.

Planning study: A study to identify and prioritize requirements for new or upgraded highways. Planning studies consider

safety concerns, user needs, economic development issues, population or demographic changes, urban planning, and

other transportation modes.

Planning criteria: Planning criteria summarize existing conditions and future conditions considered to be desirable,

affordable, and achievable. In their early stages, planning criteria are a guide for planners; when completed, they are a

summary of the planning done, and a guide for designers. Planning criteria define the “problem” that a project is

expected to address.

Corridor study: An evaluation to select a preferred corridor from a number of alternatives. A corridor identifies, in

general terms, where a highway might be built. Corridor studies compare alternatives on the basis of identified needs,

natural obstacles, environmental and social issues, and cost-benefit analyses.

Route study: A route study is the next level of refinement after a corridor study. A route study evaluates alternative road

alignments through a corridor, refining the issues considered in the corridor study.

Preliminary design: Preliminary design identifies possible alignments, develops evaluation criteria, selects one alignment,

and develops a design for that alignment.

Functional design: After site surveys and geotechnical investigation, functional design refines the preliminary

alignment design.

Design criteria: One of the products of the preliminary design process, the design criteria establish parameters within

which designers must work. Design criteria identify the number and configuration of lanes, design speed limits, access

requirements and limitations, and social and environmental constraints.

Detailed design: The development of sufficiently detailed information to define construction requirements.

Design standards: Design standards are a collection technical requirements that describe (sometimes in general terms,

sometimes in specific terms) the parameters within which a design must be developed.

Staging: Completing construction of a facility over a period of time rather than all at once, for the purpose of matching

supply and demand and deferring costs.

project had an eight-year schedule,

with completion to be by 1996 and a

preliminary cost estimate “in excess

of $600 million” (1988 dollars). In

January 1989, that preliminary

estimate was used in a presentation

to Treasury Board. The project

was approved in principle, with a

requirement that detailed plans and

funding needs be provided.

Since 1988, the scope of the

project has been revised many

times. Some items—such as the

Millstream Connector—have been

added; others— such as some work

on the Patricia Bay Highway

between Victoria and Swartz Bay

and on the Millstream Road to

Goldstream Park section of the

Island Highway—have been

deferred. Goldstream Park was

explicitly excluded from the project

in the 1988 announcement because

of environmental sensitivities in the

area. Changes to scope have been

made for many different reasons,

including: local traffic needs,

projected traffic volumes, increased

property acquisition costs, and debt

management limitations.

Details about the evolution of

the scope, schedule, and budget

for the project are contained in

Exhibit 5 (which can be found

at page 44 of this report).

Project Funding and

Expenditure to Date

The project is being funded

through the BC Transportation

Financing Authority, a Crown

corporation established April 1,

1993, by the Build BC Act. Before

1993, the Ministry of Transportation

and Highways was responsible for

funding the construction and

maintenance of all provincial

highways. Since 1993, it is the

Transportation Financing Authority

that funds highway capital projects

and approves project scope,

schedule, and budget changes. The

Transportation Financing Authority

has a formal agreement with the

ministry to have the ministry

manage the planning, design, and

construction of the Vancouver

Island Highway Project (Exhibit 2).

At the time of our audit, the

Transportation Financing Authority

was responsible for project scope,

schedule, and budget changes

involving up to $10 million.

Auditor General of British Columbia

1996/97 Report 3: Vancouver Island Highway Project: Planning and Design

Rush hour (pre-construction) Victoria approaches

Courtesy: Ministry of Transportation and Highways

1996/97 Report 3: Vancouver Island Highway Project: Planning and Design

Changes in excess of $10 million

must go to Treasury Board for

approval.

At the end of June 1996,

the budget for the Vancouver

Island Highway Project was

$1,296.3 million (1996 dollars), an

increase of $32.7 million over the

previous quarter, reflecting the

addition of the Duke Point

interchange to the project and

adjustments to show the budget in

1996 dollars. To the end of June 1996,

Auditor General of British Columbia

Exhibit 2

Vancouver Island Highway Project Relationships

Source: Ministry of Transportation and Highways

BC Transportation Financing

Authority (Crown Corporation)

Highway

Constructors

Ltd.

Vancouver

Island Highway

Project

(MoTH)

General

Contractors

Sub–

Contractors

■ serves as owner and

financier

■ subsidiary of BCTFA

■ employer of workforce

■ provides labour

relations framework

■ negotiates collective

agreement

■ enters into contractors

and sub-contractors to

provide labour

■

manages project

■

undertakes

– planning

– property acquisitions

– design

– construction

■

tenders work packages

and awards contracts on

behalf of BCTFA

■

construct sections

of highway

■

secure contracts through

public tendering process

■

purchase labour

from Highway

Constructors Ltd.

■

complete portions of

work packages for

general contractors

■

purchase labour

from Highway

Constructors Ltd.

$671.4 million had been spent on

the project (Exhibit 3).

At the start of the 1996/97

fiscal year, spending limits were

established at $175.6 million and

$159.5 million for fiscal years

1996/97 and 1997/98, with the

expectation that the project would

be completed in fiscal year 2000/01.

In June 1996, the government

announced a freeze on capital

spending pending a review of its

capital programs (including the

Vancouver Island Highway). The

review is expected to be completed

by the end of December 1996.

Project Management

In December 1987, in the

Report of the Commissioner Inquiry

into the Coquihalla and Related

Highway Projects, Commissioner

Douglas L. MacKay reported the

results of his inquiry into the issues

relating to the estimated and actual

costs of highways constructed in

recent years in British Columbia. He

was critical of the way the Ministry

of Transportation and Highways

planned, managed, and reported on

highway construction projects. Many

of his criticisms were directed, in

particular, at the way the ministry

managed large construction projects.

He recommended that the ministry

adopt “proven project management

practices for major projects.”

In the wake of Commissioner

MacKay’s report, the ministry

undertook to change the way it

managed highway construction

projects. It effected an extensive

ministry reorganization, made a

commitment to the principles of

project management as practiced

in the private sector, and created

the Planning and Major Projects

Department, with responsibility

for transportation planning and

the management of selected major

projects, particularly those expected

to cost more than $50 million.

These projects are referred to as

“major” projects.

In 1988, the Vancouver Island

Highway Project was consolidated

under the Major Projects group of

the Ministry of Transportation

and Highways. Although the

Vancouver Island Highway Project

office is part of the ministry, it is a

separate operating unit providing

almost all the services required for

the delivery of a major project

(Exhibit 4).

Auditor General of British Columbia

1996/97 Report 3: Vancouver Island Highway Project: Planning and Design

Exhibit 3

Financial Information at June 30, 1996 ($ Millions)

Source: Ministry of Transportation and Highways, Vancouver Island Highway Project, First Quarter Report, Fiscal 96/97

Actual

Budget Forecast Expenditure

Engineering/Administration $ 151.1 $ 172.9 $ 126.3

Land Acquisition 281.4 318.8 216.3

Construction 782.9 758.7 328.8

Contingency 80.9 — –

$1,296.3 $1,250.4 $ 671.4

ADM Planning

& Major

Projects

Deputy

Minister

ADM

Operations

Executive

Oversight

Committee

Technical Review

Committee

(TRC)

Chief

Highway

Engineer

ADM

Administration

Director

Region 6

Oversight

Committee

1996/97 Report 3: Vancouver Island Highway Project: Planning and Design

Partnership with

Private Sector

In the late 1980s, when the

Vancouver Island Highway Project

was in its early stages, the Ministry

of Transportation and Highways

did not possess state-of-the-art

project control systems for

managing the scope, quality, cost,

and schedule of a project the size of

the Vancouver Island Highway

Project. As well, in addition to the

other changes in the ministry, the

government had recently

introduced an Early Retirement

Incentive Program that resulted in

the loss of a large number of the

ministry’s most senior and

experienced people.

Auditor General of British Columbia

Exhibit 4

Vancouver Island Highway Project/Ministry Administration Structure

Source: Ministry of Transportation and Highways

Project

Principal

Assistant

Project

Director

Communications

Manager

Project

Director

Project Managers

Capital Region

Goldstream to Nanaimo

Nanaimo to Parkway

Parksville to Mud Bay

Mud Bay to Courtenay

Courtenay to Campbell River

Resource Managers

Environmental Management

Design Management

Project Services

Property Acquisition

Construction Management

To ensure that the project had

adequate resources—both human

and systems—the ministry

requested proposals from the

private sector to provide project

management services. UMA

Engineering Ltd. was selected,

and the ministry entered into an

agreement with the firm in June

of 1990.

The project is currently being

managed by a project team within

the Ministry of Transportation and

Highways that is a hybrid of

ministry employees and employees

of UMA Engineering. The project

team is headed by the Project

Director, who is an employee of the

Ministry of Transportation and

Highways, and each of the sub-

projects has been assigned to a

Project Manager, who is an employee

of either the ministry or UMA

Engineering. The sub-projects are:

■ Capital Region

■ Goldstream to Nanaimo

■ Nanaimo Parkway

■ Parksville to Mud Bay

■ Mud Bay to Courtenay

■ Courtenay to Campbell River

Project managers are

responsible for delivering their

projects within a set scope, schedule,

and budget, and in accordance with

ministry standards.

Transfer of Knowledge

and Technology to

the Ministry

The creation of a hybrid project

management team to manage the

Vancouver Island Highway Project

was partially predicated on a

recognition of the need for the

ministry to acquire the management

systems and expertise required

to adopt the “proven project

management practices” referred to

by Commissioner MacKay. UMA

Engineering brings its project

management expertise and systems

to the project, and knowledge is

being transferred to ministry

employees as they work with UMA

employees.

One of the deliverables of the

Vancouver Island Highway Project

is an organized body of knowledge

about how to manage a major

project. This is to be contained in

the Vancouver Island Highway

Project Implementation Plan. The

plan manual will describe the

policies and procedures for

managing the planning, design,

and construction components of

a project within the standards

established by the ministry and

within the scope, schedule, and

budget parameters established by

the government. It will also set out

how a project should be organized,

implemented, monitored, and

controlled, with guidance on project

scope, budget, and scheduling

management, and on the

development and reporting of

project information for monitoring

and project management decision-

making purposes.

The Implementation Plan was

in draft form at the time of our

audit, and due to be published

before the end of 1996. It is

expected to evolve and be updated

over the life of the project.

Project Management

Audits

In 1991, the ministry retained

a consulting firm to perform a

management audit of the

Vancouver Island Highway Project.

The audit was intended to:

Auditor General of British Columbia

1996/97 Report 3: Vancouver Island Highway Project: Planning and Design

“Review and assess

the appropriateness and

effectiveness of the functions,

policies, practices and controls

(financial, administrative and

technical) currently in place

for the management of the

Vancouver Island Highway

Project.”

The consultants concluded, in

their March 1992 report, that the

Vancouver Island Highway Project

had a sound project management

organization in place, with project

management systems functioning

properly to provide appropriate

information for management

decision-making. They approved

of the use of a hybrid team of

professionals to provide project

management and to enable the

ministry to maintain direct control

of the project while tapping the

resources of state-of-the-art project

management personnel and

technology. The consultants also

concluded that the scope, schedule,

and budget goals established for the

Vancouver Island Highway Project

were being managed within

reasonable tolerances and with

adequate accountability. However,

they found there was no framework

within the ministry for quality

management.

The consultants made a

number of recommendations they

believed would enhance the overall

effectiveness of the project

management team and the

project management process.

Recommendations included:

implementation of a Quality

Management strategy to provide

the proper balance between those

responsible for executing projects

within scope, schedule, and budget

and those responsible for the quality

of results; clarification of the division

of responsibilities between the

Vancouver Island Highway Project

project team and the professional

services branches of the ministry;

and a quality assurance focus

within the project team to ensure

that the work of retained design

consultants met required standards.

The quality management

recommendations of the consultant

were consistent with comments

made by the Auditor General in

1990. We noted that one result of the

decision to do more business by

contract was that the ministry’s

quality assurance processes would

have to become more formal and be

supported by staff with enough

experience to carry them out. Part

of the reason for contracting with

UMA Engineering to provide

project management services to the

Vancouver Island Highway Project

was to ensure the adequacy of

the ministry’s quality assurance

processes.

In 1994, the ministry asked the

consulting firm to perform a follow-

up review of the Vancouver Island

Highway Project. The consultants’

report (issued in December 1994)

concluded that, since the earlier

audit, the project had made

significant progress in organizational

evolution. Overall improvements

had been achieved in all functional

areas, and project performance had

been good.

Also noted was that the

traditional ministry approach to

project delivery—separating the

design phase from the construction

phase, with limited engineering

involvement in the construction

phase—had changed significantly

on the project so that construction

Auditor General of British Columbia

managers had become responsible

for approving design documents

before they were issued for tender.

The consultants recommended that

this progress be supported through

the implementation of a program to

have design consultants involved

throughout construction and,

specifically, to have designers review

all design changes made during

construction to ensure that the

integrity of the design is maintained

and that design criteria are met.

The review identified a number

of potential risk areas, including

again the lack of a ministry-wide

quality management program, and

suggested the implementation of a

Value Engineering program for the

project. Value Engineering was

implemented in regard to the

project in mid-1995. Although it

was undertaken too late to provide

maximum benefits for those project

segments reviewed as part of a pilot

project, the results of the process

were worthwhile. The project team

has subsequently conducted Value

Engineering reviews at an earlier

stage on other project segments.

During the course of our

review, we found that project

management structures and

processes have continued to evolve

over the life of the project to

address the issues raised in the

MacKay Commission report and in

the various consultants’ reports.

Organization of

This Report

We have organized our

findings into four sections:

■ Assessment of Designs

■ Highway Planning

■ Design Management

■ Standards

Auditor General of British Columbia

1996/97 Report 3: Vancouver Island Highway Project: Planning and Design

Adequate planning and design

management processes can provide

reasonable assurance that adequate

results (designs) will be produced.

However, a review of the actual

results of the planning and design

process provides a better assessment.

As part of our audit

examination, we reviewed the

results of the planning and design

process for a number of project

segments on the Vancouver Island

Highway Project.

The project segments selected

included both bridges (stream

crossings and grade separations)

and highway segments that were at

different stages of completion, and

in different parts of the project. To

help us in assessing the

appropriateness of the designs and

to evaluate whether they would

provide value for money, we

contracted the services of technical

experts in highway design.

We expected to find designs

that should meet functional

requirements at projected levels

of service and forecasted traffic

volumes; designs that are within

scope and budget parameters; and

designs that incorporate lifecycle

cost minimization objectives. We

looked for cost-benefit analyses

(including lifecycle cost analyses) of

alternatives.

Conclusion

We concluded that the designs

reviewed offer adequate value for

money within the context of current

ministry standards and guidelines.

Technically and functionally, they

are consistent with the established

criteria that govern highway or

bridge design and, when necessary,

any significant departures from

such criteria have been adequately

investigated, explained, and

documented.

However, if the Value

Engineering reviews had been done

earlier in the planning and design

process, it might have been possible

to achieve better value for money

from the projects.

Findings

Meeting Requirements

We found that the designs for

the project segments included in

our sample, whether preliminary

or detailed, were developed in

accordance with the established

design criteria and satisfied the

project objectives.

For several of the project

segments reviewed, design criteria

variances were considered and

assessed before confirming the

appropriateness of the proposed

design criteria. On one of the

project segments, two of the design

criteria—functional classification

and design speed—were amended

following preliminary design studies,

when it was recognized that the

project segment, as originally

planned, would result in significant

overcapacity.

Documentation of changes

to design criteria or functional

requirements is one area that needs

improvement. In several of the

project segments, changes were

made to design criteria (functional

classification and design speed)

Auditor General of British Columbia

assessment of designs

during the design process, but the

reason, or sometimes the approval,

for the change was not

documented.

Considering Alternatives

We found that for all the

project segments we reviewed,

alternatives were developed and

evaluated during the planning and

design process. For example:

■ configuration and staging

variations were considered for

the Craig’s Crossing Interchange;

■ alignment alternatives were

considered for the Transfer Beach

to Jones Road section of the

highway through Ladysmith;

■ different structural solutions

were considered to deal with

severe geotechnical conditions

found at the Colwood Overpass;

■ several alignment alternatives for

the Campbell River crossing were

developed and assessed; and

■ level crossings and other

alternatives were reviewed in an

effort to avoid construction of

bridges for logging roads

crossing the Inland Island

Highway corridor.

Cost-Effective Designs

Cost-effective designs provide

good value for money. The term

“cost-effective” describes an

appropriate balance between

functionality of an item and the

lifecycle cost of the item.

Functionality of a highway or a

bridge is measured according to

how well it performs its intended

function of providing for safe and

swift movement of vehicles over the

lifetime of the asset. Lifecycle cost

of a highway or bridge includes the

total of capital and maintenance

(including periodic rehabilitation)

costs over its lifetime.

The cost-effectiveness of design

alternatives can be assessed by

comparing the functionality and

estimated lifecycle cost of each

alternative. This has not been done

for all of the Vancouver Island

Highway Project designs, nor is it

part of the ministry’s current design

process requirements. We believe

that such analyses should be

included as a required element in

the ministry’s design process.

We found no evidence of

imbalance between the functionality

of designs and their capital cost.

However, we noted that only

limited attention had been given to

lifecycle costs during development

of the designs.

Least Lifecycle Costing

In 1991, we suggested that the

ministry must do better costing if

good value-for-money decisions

were to be made. We noted that, for

highways, the quality of the initial

construction and the rate of wear

are directly related. The stronger

the initial construction, the longer

the road will last, and the less

maintenance and rehabilitation it

will require. However, high quality

costs more money initially. The best

value for money is achieved when

quality that minimizes the lifetime

cost of the road is chosen.

Our report acknowledged that

the determination of least lifetime

cost was a difficult task, but we

noted that the ministry was starting

to give more consideration to the

concept in its decision-making.

Auditor General of British Columbia

1996/97 Report 3: Vancouver Island Highway Project: Planning and Design

In this audit we found that

explicit consideration of lifecycle

costing was still not part of the

design process for any of the project

segments reviewed.

Recommendation

The ministry should include, in

addition to estimated capital cost,

the estimated lifecycle cost of each

alternative being evaluated during

the design process.

Value Engineering on

the Vancouver Island

Highway Project

In response to the project

management consultant’s

recommendation that the Vancouver

Island Highway Project perform

Value Engineering, a pilot project of

nine Value Engineering reviews—

which were considered to cover a

representative sample of project

segments—was conducted by

several Value Engineering

consultants in the summer of 1995.

Auditor General of British Columbia

Value Engineering

Value Engineering is a formal, organized procedure for reviewing a project in order to identify alternatives that

can provide a more cost-effective product. The purpose of such a review is to ensure identification of the most

cost-effective designs without reducing performance or reliability. In use for approximately 50 years in the

United States, it evolved out of the need to find substitutes for materials that had become scarce during the

Second World War.

Value Engineering evaluates a proposed design against the functional requirements the project is intended to

meet. Cost-effective alternatives are identified and evaluated. However, emphasis is not simply on reducing the

cost of a project—rather, it is to identify savings without reducing performance or reliability. The goal is to

identify design solutions that provide the greatest value over the long term, not designs that simply result in

reduced capital cost but may increase overall lifecycle costs.

This type of analysis is inherent in all good design practice. The added value of a separate Value Engineering

review comes from having a team of experts take an independent look at a design. Because of the cost in

assembling a team of experts for even a short review, however, the project must be of sufficient magnitude and

complexity to warrant the cost of a review.

The literature advocating Value Engineering promises savings ranging any where from 5 to 50% of construction

and operating costs. The greatest returns have been reported from reviews that took place early in the project—

during planning or preliminary design. If a review takes place early in a project, impact on project schedule is

minimized, costs of changing plan documentation is less than if changes are made later, and there is less

chance that “pride of ownership” of ideas will interfere with consideration of alternatives.

The success of any Value Engineering review is dependent on the extent of the implementation of the review

team’s recommendations. Implementation can be limited by a number of factors. If, for example, maintaining

an announced schedule for project completion is more important than achieving best value for money,

recommendations that conflict with such priorities will not be implemented. Other limiting factors are an

inherent resistance to change and concern about risks associated with innovation.

Even a Value Engineering review that does not identify opportunities for achieving more cost-effective designs

can be useful, providing an owner, or other stakeholder, with the benefit of independent confirmation that the

original design is likely to provide good value for money.

Six highway segments and

three bridge project segments were

selected from the project, providing

a sample that represented the

range of geographic distribution

and project type. The total

estimated construction cost of

these project segments was

$125 million (approximately 15% of

the total project construction cost at

that time).

As a result of the nine reviews,

a number of recommendations were

implemented, resulting in estimated

benefits of more than $2 million.

Other recommendations valued at

over $1 million were deferred for

further review and possible

implementation. The cost of the

Value Engineering reviews was

$630,000.

Review of Value

Engineering Studies

We reviewed the results from

seven of the Value Engineering

studies that were part of the 1995

pilot project. We looked in

particular at the extent to which

some recommendations had been

implemented and the reasons for

not implementing others.

We found that, in general,

Value Engineering recommendations

had been implemented where

possible. For those that were not

adopted, the reason included one or

more of the following:

■ the recommendation included

changes to design criteria;

■ the recommendation did not

comply with ministry policies or

standards;

■ further detailed review by the

project team revealed that the

estimated savings identified by

the Value Engineering studies

were not available either because

of implementation costs or

because the potential savings had

been overstated;

■ other ministry branches were the

final decision-makers, and

implementation of the

recommendation would have to

be reviewed from a province-

wide perspective; or

■ previous commitments had been

made to the public and to local

municipalities.

We concluded that the Value

Engineering studies, in several

cases, had been undertaken too late

in the design process. Nevertheless,

the results of the studies have been

worthwhile to the Vancouver Island

Highway Project from both an

economic and a process

improvement point of view.

Since the pilot project in 1995,

the project team and other areas of

the ministry have conducted several

Value Engineering studies with

positive results. Value Engineering

guidelines are now in place as part

of the planning and design process

for future portions of the Vancouver

Island Highway Project. We believe

that similar guidelines should be

applied to other ministry projects.

Auditor General of British Columbia

1996/97 Report 3: Vancouver Island Highway Project: Planning and Design

The decision to build or

upgrade a highway is based on an

analysis of the transportation needs

and goals of the provincial and local

governments. The initial decision

about whether or not to proceed

with a particular project should take

into consideration: identified need

for the highway, preliminary public

input, and known constraints

(economic, environmental, etc.).

Once the decision to proceed has

been made, a few basic planning

decisions—decisions about the

classification and design speed of

the highway, the level of service that

will be provided, and the extent to

which construction of the project

will be staged—effectively determine

much of the cost of a project.

We expected to find: an

assessment of needs and how those

needs will be addressed by the

Vancouver Island Highway

Project; planning based on reliable

information and reasonable

forecasts; and a reasonable process

for receiving and incorporating

public input. We also expected an

appropriate evaluation of costs and

benefits—monetary and non-

monetary—of alternatives.

Conclusion

When the project was

announced, neither a global

transportation plan nor a highway

system plan existed for the

province, or even for Vancouver

Island. Many of the early planning

decisions for the Vancouver Island

Highway Project that would have

been part of system planning were

thus made without adequate

information. Furthermore,

documentation of early planning

decisions is incomplete—many

decisions appear to have been based

on professional judgment without

formal analysis. Despite these

deficiencies in needs identification

and evaluation of cost and benefits

of alternatives, once the project was

approved by the government the

detailed system and facility

planning for the Vancouver Island

Highway Project has been adequate.

Findings

The Decision to Undertake

the Vancouver Island

Highway Project

Our audit did not include a

review of the decision to undertake

the Vancouver Island Highway

Project. The decision to proceed

with the project—to allocate much

of the ministry’s capital funding to

the project—was an issue of

resource allocation and a decision

made by government.

Early Planning

In early November 1988, the

Minister of Transportation and

Highways announced that the

government would be spending

more than $200 million on the first

phase of the Vancouver Island

Highway Project. The announcement

said that the Vancouver Island

Highway Project would include a

major upgrade from Swartz Bay to

Nanaimo and a new Inland Island

Freeway from Nanaimo to Campbell

River. The project was to be

completed by 1996 at a total cost in

excess of $600 million. Details of

the construction schedule were

also provided.

Auditor General of British Columbia

highway planning

The information on which the

announcement was based was

limited, originating from conceptual,

rather than detailed, planning

studies. One of the drawbacks of

making announcements with

limited information is that the

announcement creates expectations

that further review may determine

are not practical or possible. This

was the reason that Commissioner

MacKay recommended, in late 1987,

that “in the event a major capital

highway project must be announced

at a conceptual level of development,

the government [should] ensure

that expenditure authorizations be

limited to interim amounts sufficient

to develop project planning to a

level such that proper estimation

of cost and definition of scope can

be made.”

At the time of the

announcement, Treasury Board had

not approved either the scope or

the budget for the project. Not

until October 1989 did the ministry

prepare a Treasury Board submission

seeking approval for a scope of

work similar to that announced.

With the more detailed information

then available, the proposed project

budget was $1.4 billion.

In late November 1988, the

Premier announced the formation

of regional transportation planning

task forces to prepare regional

transportation plans. The report of

the Vancouver Island Transportation

Task Force, released in June 1989,

concluded that, for safety and

regional economic development

reasons, the Vancouver Island

Highway Project was the main

priority for the region.

Justification for the Project

The decision to upgrade the

Vancouver Island Highway was

based on apparent deficiencies—

specifically, safety and mobility—

of the existing facility. Functional

classification and design speed for

the proposed highway were

initially set at a high level to

improve safety and mobility factors.

Anticipated population growth for

Vancouver Island was also a factor.

However, traffic volumes were not

the determining factor for initial

decisions about what would be

built. The Minister’s 1988

announcement anticipated the

functional classification for the

highway without consideration of

projected traffic volumes.

No detailed analysis of costs

and benefits was conducted until

1991, when a ministry-commissioned

consultants’ report indicated that,

based on the project scope and

budget at the time, the project had a

positive net benefit. The consultants

found that the project was largely

justified on the basis of lives saved

and injuries and property damage

avoided as a result of improvements

to the highway. This, the consultant

concluded, combined with the

benefits of reduced travel time,

increased user comfort and

convenience, fuel savings and

reduced vehicular emissions, made

the Vancouver Island Highway

project “a cost-effective expenditure

of funds.”

In 1993, another consultant’s

review also concluded that there

would be positive net benefits from

the project, although the consultant

found that time savings made up

60-70% of user benefits. This

consultant made the findings using

the ministry’s recently-developed

procedures for measuring the direct

economic benefits and costs to

society of selected portions of the

Vancouver Island Highway Project.

Auditor General of British Columbia

1996/97 Report 3: Vancouver Island Highway Project: Planning and Design

Facility Planning

The purpose of facility

planning is to assess alternatives

and, ultimately, to identify the

optimum configuration and route

for a highway.

We found that each of the

subprojects has undergone in-depth

study and the information used for

planning has been comprehensive.

However, forecasting methods have

varied between subprojects, and

planning assumptions have not

been well documented in some

cases. Although the different

methods have yielded reasonable

results, we believe that a more

uniform approach, using

standardized evaluation criteria,

should be used to ensure consistency

between project segments and to

facilitate comparisons between the

Vancouver Island Highway Project

and other projects.

Early planning studies

thoroughly reviewed the options,

taking into account not only

engineering, topographical, and

geotechnical considerations, but

also environmental, socio-economic,

and cultural (e.g., ancient burial

grounds) factors. However, some

options seem to have been eliminated

based on professional judgment and

experience, without formal analysis.

For example, upgrading Highway

19 from Parksville to Courtenay was

considered to be impractical because

of the high cost of land along the

highway. That option was therefore

excluded from early planning

studies. Little use was made of

formal economic review techniques

such as cost-benefit analysis, and in

some cases the criteria used to

choose between alternatives were

not clear.

Auditor General of British Columbia

McKenzie Interchange (Victoria)

Courtesy: Ministry of Transportation and Highways

Although traffic forecasting

was done, little emphasis was

placed on the forecasts for shaping

the proposed project . Building

the Inland Island Highway from

Parksville to Courtenay in stages,

as traffic volumes increased, was

discussed, but rejected without

formal analysis by the project team.

The Courtenay to Campbell River

section of the Inland Island

Highway was reduced from a

freeway to a two-lane expressway

with protection for future

expansion to a four-lane freeway;

but, for the most part, the early

plans changed little from the

scope as announced. Staging

considerations concerned the order

of construction rather than the need

to bring capacity on stream as

demand required.

Another problem we

encountered was in following the

decision-making trail in some

projects. In one case, we noted a

major change in direction between

sequential planning studies, but no

documentation of how or why the

decision was made.

Summary of Planning

Up to 1991

In June 1991, a consulting firm

was commissioned to “provide a

written record within one document

of the planning work done to date

on the [Vancouver Island Highway

Project], a description and economic

analysis of the project as proposed

at this time, [and] a conceptual plan

for the long range development of

the corridor.”

The review, which predated the

involvement on the project of most

of the Vancouver Island Highway

Project project team, was

commissioned because of the

apparent lack of detailed

planning—or at least an apparent

lack of documentation of such

planning—before many of the

basic decisions were made. The

consultants reviewed and

documented: available traffic

assumptions and conditions for a

20 to 25 year horizon; levels of

service with planned and committed

highway improvements; planning

criteria used for various project

segments; alternatives considered

and criteria used to evaluate them;

transit alternatives; and

environmental issues.

The report, entitled

Comprehensive Planning Assessment:

Vancouver Island Highway Project,

was issued in June 1991. It noted

that no plan had been developed

for improvements through

Goldstream Park, despite the

apparent need to deal with the

bottleneck created by a two-lane

road through the park joining

proposed four-lane facilities on

either side of the park. Also

described were the limitations

imposed by the decision to upgrade

the existing corridor between

Goldstream and Nanaimo, and the

need to identify a corridor for a

new highway on a new alignment

at some point in the future (with

specific concerns raised about the

level of service available to traffic

passing through Duncan).

Nevertheless, it concluded that

“despite the obvious lack of an

overall planning process which

would clearly have been desirable,

the major decisions and directions

chosen in pursuit of the project are

well founded.”

Auditor General of British Columbia

1996/97 Report 3: Vancouver Island Highway Project: Planning and Design

Planning Since 1991

There has been only limited

planning undertaken for the

Vancouver Island Highway Project

since 1991.

The Victoria Approaches

section of the project was halted in

May 1991 to permit the Capital

Regional District to conduct its own

transportation planning exercise. It

did this by developing a multi-

modal plan, a highway systems

plan, and then specific facility plans.

One of the outcomes of the process

was that the Millstream Connector

was added to the project in 1993.

The Planning Framework

Since 1991, the ministry has

made significant improvements to

the planning process in several

areas. It has developed a number of

guidelines for planning, including a

functional classification study and a

guidebook on the appraisal of

highways investments. It has also

developed a model for conducting

cost-benefit analysis—the User

Benefit Cost Spreadsheets model—

and is enhancing its techniques for

multiple accounts evaluation, a

method of evaluating economic

and social costs. These tools will

bring a greater degree of uniformity

to the methodologies used in

planning studies.

Until recently, consultants

maintained a proprietary interest

in any model they developed for

traffic forecasting. The ministry,

therefore, could not re-use an

existing model unless it belonged to

the consultants currently doing the

work. To address this, the ministry

has been developing a formal

framework for planning, and now

has guidelines for planning and

formats for modeling. Models now

become the property of the ministry

so that successive consultants do

not have to recreate the models for

each planning study. However,

many of the ministry’s policy and

procedure documents for planning

have yet to be finalized.

The ministry is also in the

process of developing a provincial

highway plan based on measurable

performance factors and criteria,

with data about how well those

criteria are being met or are likely

to be met in the future. The ministry

hopes to use the plan to identify

current and projected deficiencies in

the highway system, and actions

required to address the deficiencies.

A draft of the strategy component

of the plan was produced in the

summer of 1995, but had not yet

been finalized at the time of

our audit.

The Vancouver Island Highway

Project team has documented its

planning procedures for inclusion in

a project management manual and

these procedures have been used on

recent planning projects on the

Vancouver Island Highway Project.

The procedures are consistent with

industry standards.

Since 1993, budget pressures

have had an impact on the project.

Certain planning decisions have

been revisited, staging of

construction has become a primary

consideration, and other

opportunities to reduce or defer

costs have been identified. For

example, initial construction of the

Admirals-McKenzie interchange

on the Trans Canada Highway

north of Victoria will retain some

characteristics of an signalized

intersection, rather than becoming

a full interchange. This will save

about $15 million in capital costs.

Auditor General of British Columbia

In summary, it is clear that

significant progress has been made

in planning since the project was

announced, particularly in the area

of global and systems planning.

Facility planning has been adequate

—if not always consistent—although

there are gaps in the documentation

of the planning process.

Public Consultation

Communication with the

public has been a major feature of

this project. On past projects, the

ministry has been criticized for

holding public information sessions

in which the ministry seemed to be

simply informing the public of

what was going to be done, without

providing any opportunity for

feedback or discussion. During

early public meetings to introduce

the Vancouver Island Highway

Project, ministry staff met with

unanticipated public resistance to

the project as proposed. People

envisaged a “Los Angeles-type

freeway system” and the immediate

reaction was negative. The ministry

response was to hold such meetings

earlier in the planning process and

to change the meeting format so

that the public could comment on

the project alternatives. Initially, the

Public Affairs Branch of the ministry

conducted public information

sessions, but when the Vancouver

Island Highway Project office was

established, a Communications

Manager position was created with

responsibility for planning and

implementing an effective public

information campaign for the project.

The project team has moved to

an “open house” format—perceived

to be a more positive forum than

public meetings—which gives the

public an opportunity to talk with

staff and express their concerns in a

relatively quiet, more personalized

atmosphere. The project team

developed printed materials and

circulated questionnaires to gauge

public reaction to proposals. As

project staff became more aware of

the public’s desire to provide input,

questions became more open-

ended and opportunities for input

came at an earlier stage in the

planning process.

To ensure that a wide range

of community interests were

represented, liaison committees

were also set up in each community,

consisting of representatives of the

municipal council, the head of

Engineering for the municipality,

up to four representatives of

community-based groups within

the municipality, and the highway

project’s Project Manager for that

section of the project.

The process for receiving

public input appears to be

reasonable, and the Vancouver

Island Highway Project team has

responded to many suggestions

from the public, local politicians,

and MLAs.

The ministry also set up

Vancouver Island Highway Project

information offices in Colwood,

Nanaimo, Courtenay, and Campbell

River. These are open to the public

year round. As well, newspaper

advertisements and information

supplements are distributed

periodically, advising the public of

progress and upcoming events.

Auditor General of British Columbia

1996/97 Report 3: Vancouver Island Highway Project: Planning and Design

Highway planning evolves

into highway design. After corridor

and route selection decisions have

been made, a project moves into

an iterative design process.

Preliminary design defines the basic

characteristics of the route selected.

Functional design follows

preliminary design, providing more

detail in terms of alignments,

intersections, and right-of-way

requirements. The final design

details the construction specifications

necessary to permit contractors to

bid on the construction of the various

projects that make up a highway.

We expected to find a good

design management process,

structured and managed in a

manner to ensure that designs are

consistent with approved project

scope and will result in highways

and bridges that are both

functionally effective and cost-

effective. A good design

management process is one in

which there is: a clear process,

clearly defined responsibilities, and

an adequate quality assurance

program, including an adequate

design review mechanism.

Conclusion

The project team has an

adequate process to manage

design. However, we believe that

improvements could be made over

the long term if the ministry had

a formal program to assess the

functional effectiveness and cost-

effectiveness of designs as built, and

to capture the experience in its

corporate memory.

Findings

The Design

Management Process

Design policy and procedures

for the project have been

documented and published in one

form or another since 1992. The

process, as set out in the draft

Implementation Plan, includes all

possible steps that could be

required in the design of a section of

highway or a structure (such as a

bridge or interchange). The

process—intended to be used as a

guideline—is adapted to suit the

specifics of each contract, and the

process to be followed is clearly laid

out in the terms of reference for

each design assignment.

In 1994, the consultant engaged

to review the Vancouver Island

Highway Project’s project

management practices concluded

that the design management

procedures, as drafted, were

“comprehensive and provide an

adequate basis for the management

of the Vancouver Island Highway

Project design process and, when

followed, ensure a consistent design

approach by Vancouver Island

Highway Project design consultants.”

Our review has confirmed this

assessment, and found that the

required procedures are being

followed.

Consultants are required to

produce a series of deliverables

which are subject to review by

Vancouver Island Highway Project

staff at several points during the

design process. The project staff

involved in the review vary

Auditor General of British Columbia

design management

according to the facility being

designed.

The process used on the

Vancouver Island Highway Project

is much like that used on the

ministry’s other projects, and in

other jurisdictions, although some

extra reviews are performed.

Design consultants confirmed that

they are comfortable with the

project’s design management

process and have a clear

understanding from their contract

documents about what is required

of them.

Responsibilities for Design

A number of distinct groups

have specific responsibilities related

to the project: the Vancouver Island

Highway Project staff, the ministry

Professional Services staff, the

ministry regional staff, and the

consultants.

The Vancouver Island Highway

Project staff are responsible for

ensuring that the design is consistent

with the approved scope and budget,

and that the design complies with

ministry technical standards.

The ministry Professional

Services staff provide technical

advice and policy direction to the

project, and review any proposed

variances from ministry standards.

At one time, Professional Services

staff were more involved with

design review, but as the project

team has developed their

involvement has declined. The

recent restructuring of the ministry

has made it clear that, in future,

Professional Services staff will

have a monitoring role and

provide technical advice only

when requested.

Ministry regional staff provide

input to the project based on their

local knowledge and experience.

In some cases, they also provide

specific technical and professional

design services to the project.

Consultants do most of the

actual design work, in accordance

with the terms of reference

contained in their contracts. They

are responsible for producing a

design that meets ministry design

standards, and for providing

sufficient justification to support

any proposed variances from those

standards.

Two committees have been

established to provide liaison

between the Vancouver Island

Highway Project management team

and the rest of the ministry.

The Project Management

Committee was set up in 1990 to

enable ministry oversight of the

project, provide guidance and

direction to senior project

management on scope, schedule,

budget, and standards, and monitor

the status of the project. Over time,

this project oversight role has

changed because of the formation

of the Transportation Financing

Authority. In fact, based on a review

of the minutes of the meetings and

interviews with committee members,

a project management consultant

noted that the Project Management

Committee was not fulfilling its

mandated terms of reference. The

future of the committee was under

review at the time of our audit.

The Technical Review

Committee was established to

provide guidance on technical

matters, make recommendations to

the Chief Highway Engineer about

proposed variances from standards,

and facilitate communication

Auditor General of British Columbia

1996/97 Report 3: Vancouver Island Highway Project: Planning and Design

between the Vancouver Island

Highway Project management

team and the rest of the ministry.

Membership consists of

representatives of each of the

Highway Engineering disciplines

(including Bridge Engineering,

Highway Safety, Highway

Environment), the Regional Director

for Region 6, and the Vancouver

Island Highway Project Manager or

Design Manager.

In July 1995, the consultant

engaged to review the Vancouver

Island Highway Project’s project

management practices concluded

that the Technical Review

Committee was “effective in

providing the communications

between Professional Services and

the Vancouver Island Highway

Project, ensuring the involvement

of Professional Services in approval

of Design Criteria early in the

design process, and facilitating

Vancouver Island Highway Project

design quality assurance.” We

observed, however, that the

committee has recently been less

effective, perhaps partly because of

the differing perspectives of the

project team and the rest of the

ministry. At the time of our audit,

discussions were taking place to

address the committee’s problems.

Communication

within the Ministry

Communications within the

ministry need to be improved.

During our audit, we noted some

tension between different groups

involved in the project.

Each group tends to perceive

issues in terms of its own concerns,

priorities, and accountability, rather

than seeing the issue from a ministry

perspective. The priorities of the

Vancouver Island Highway Project

staff emphasize building to scope,

meeting the schedule, and

minimizing capital and lifecycle

costs, with emphasis on minimizing

capital costs. Professional Services

staff are concerned with the integrity

of ministry design standards.

Ministry regional staff are concerned

about how improvements and

additions to the highway system

will affect long term maintenance

and rehabilitation costs.

These tensions are particularly

noticeable in the area of the

application of design standards. In

their efforts to minimize construction

costs, the Vancouver Island Highway

Project team has proposed

alternatives to design standards

which it believes will meet functional

requirements at a lower cost.

Ministry Professional Services staff

are reluctant to approve variations

unless they are convinced the

alternatives have equal performance

characteristics in both the short and

long terms. Ministry regional staff

are concerned that variations may

have negative implications for

maintenance and rehabilitation

costs—implications that will not be

evident until after the project has

been turned over to them. These

concerns are exacerbated by the fact

that the ministry does not have an

established analytical framework

(one that includes risk analysis and

cost-benefit analysis) by which such

concerns can be resolved.

Design Consultants

Consultants registered with

the ministry are invited to submit

proposals for design assignments.

The objective of the registration

and rotation system is to ensure

Auditor General of British Columbia

that consulting work is reasonably

distributed throughout the

consulting community. The

consultants’ credentials are reviewed

before they are placed on the list of

registered consultants, and each

consulting firm is assessed to

determine the maximum size of

contract on which it can bid.

The relationship between the

Vancouver Island Highway Project

and consultants is clearly described

in the terms-of-reference portion of

design contracts (which set out the

responsibilities of the parties).

The primary responsibility of

the consultants is to meet all the

milestones and produce all the

deliverables as required in the

terms of reference.

The consultants are also

required to provide quality control

over the design process to ensure

that designs meet functional

requirements and ministry

standards. In the past, the ministry

performed the quality control

function, reviewing consultants’

work and being closely involved in

design development. However, in

the case of the Vancouver Island

Highway Project, the project team

has concentrated instead on a

quality management (or quality

assurance) role, ensuring that

consultants have quality control

procedures in place and working

properly. All consultants must

submit a quality control plan with

their proposals and they are

responsible for submitting the

quality control reports they have

identified in their plan. The Design

Coordinator for the sub-project

visits the consultant’s office and

monitors compliance with the

consultant’s quality control plan.

Quality Assurance of

Consultants’ Work

Design reviews play an

important role in providing quality

assurance. The reviews may be

formal or informal, and they may

involve internal peer review or

review by outside consultants. It

is standard practice for new

consultants to review the work of

their predecessors when they take

over a design project as it moves

from one level of detail to the next,

and for design teams within the

consulting firm and within the

ministry to critically review designs

as they progress.

Review of the deliverables by

Design Coordinators and other

members of the project team

provides an opportunity to ensure

that the consultants are conducting

appropriate analyses and reviewing

all relevant options (subject to scope

and budget constraints) in terms of

cost and other project objectives.

Design Coordinators may also ask

ministry Professional Services staff

to review designs at any stage,

particularly if there are special

concerns.

There are no specific penalties

for poor performance by consultants.

If a contract is not going well, the

Project Manager may ask for

different staff to be assigned to the

job by the consultant. In extreme

cases, the Project Manager can

terminate the contract with the

consulting firm. In most cases,

however, there is negotiation until

ministry staff are satisfied that the

design meets requirements.

At the end of each design

assignment, Design Coordinators

are required to make reports to the

consultant registration system

Auditor General of British Columbia

1996/97 Report 3: Vancouver Island Highway Project: Planning and Design

administrator about the performance

of the consultants. If there has been

poor performance by a consultant,

the Design Coordinator is expected

to make a negative report. This

could result in the firm being

removed from the list of qualified

consultants or having its assessed

capability downgraded. However,

at this time, evaluations of past

performance are not always

considered when selecting

consultants.

Post-construction

Evaluation of Designs

Post-construction evaluations

of designs are a useful quality

improvement tool if the performance

results of designs are fed back to

consultants and ministry staff.

Although post-construction

reviews are conducted on the

Vancouver Island Highway Project,

they are mainly to identify problems

related to construction. They do not

include any analysis of the cost-

effectiveness of the designs, although

it is understood that designs that

are difficult to construct generally

result in higher costs.

The Environment Management

section of the ministry does conduct

post-construction evaluations that

look at the functional effectiveness

and cost-effectiveness of

environmental protection and

mitigation work for the purpose

of improving future efforts.

As well, the ministry monitors

the performance of its facilities

on an ongoing basis and this

experience may be reflected in

standards, although there is no

Auditor General of British Columbia

Big Qualicum River Bridge (near Parksville)

Courtesy: Ministry of Transportation and Highways

formal process for this. For the

most part, the feedback loops are

not well developed and ministry

staff are not well informed about

the performance of designs.

Consultants also receive little

feedback from the ministry about

the performance of their designs.

Recommendation

We recommend that the

ministry formally monitor the

performance of the highway system

over time in order to identify and

replicate, where practical, design

features that provide the most cost-

effective solutions to identified

highway transportation needs.

Auditor General of British Columbia

1996/97 Report 3: Vancouver Island Highway Project: Planning and Design

In order to ensure a reasonable

degree of consistency in the

highway system throughout the

province, the ministry has, over the

years, developed a number of

standards that predetermine how

recurring planning, design, and

construction issues will be handled.

These standards are intended to

ensure the planning, design, and

construction of highways that are

safe and reliable. We think they

should also ensure the planning,

design, and construction of

highways that are cost-effective

capital investments.

Our audit reviewed the

application of the ministry’s

standards to the Vancouver Island

Highway Project to determine if

they are likely to produce cost-

effective designs that meet the

needs of the project. We expected to

find planning and design standards

that are adequately documented,

consistent with similar standards in

other provinces, and regularly

reviewed and updated to

incorporate policy changes and new

technology. We also expected that

value for money would be a factor

in the development and application

of standards.

Conclusion

The planning and design

standards currently being used by

the ministry are generally adequate

from a technical point of view.

However, historically, the ministry

has placed more emphasis on safety

and reliability in the development

and application of its standards

than on their cost-effectiveness.

Consequently, although the design

process provides opportunity to

develop cost-effective design

alternatives to ministry standards,

there has been insufficient use of

formal cost-benefit and risk analysis

techniques to evaluate alternatives.

Findings

Planning Standards

Planning standards—

specifically, the guidelines for

the determination of functional

classification, design speed, and

planned level of service within the

design life of a highway—are major

determinants of the cost of a new

or upgraded highway. Potentially

greater savings are available from

reviews of these standards than

from changes to design standards.

Since June 1992, a major

decision in the highway planning

and design process has been the

determination of the functional

classification for a highway project

that is to be built. This decision is

now fundamental in determining

how a particular highway will be

configured and what it will cost.

The Highway Functional

Classification Study, described as

a guideline for planning highway

system development, establishes a

functional classification matrix

which groups highways into classes

according to the character of the

service they are to provide—for

example freeway, expressway, or

arterial highway. The character of

service reflects the relative emphasis

given to mobility (ease of passage)

on one hand and access (opportunity

to enter or exit the highway) on the

other hand.

Auditor General of British Columbia

standards

Two of the critical elements in

the determination of the appropriate

functional classification for a

highway are the forecast traffic

volume for the design life of the

highway (usually 20 years into the

future) and the targeted minimum

level of service during that period.

Level of service describes the

smoothness of the flow of traffic on

a highway and is categorized from

levels A to F (A being free-flowing,

low-volume traffic and D, E, and F

ranging from occasional traffic

congestion to stop-and-go conditions

with frequent long delays). Level of

service goals drive the calculations

that lead to the determination of

appropriate functional classification,

based on expected future daily

traffic volumes.

The type of terrain that the

highway will traverse is another

factor. The ministry categorizes

terrain types as level, rolling, or

mountainous. The levels of forecast

traffic volume that justify a certain

type and configuration of highway

vary according to terrain. For

example, more than 7,000 daily units

of traffic on mountainous terrain

suggest the need for a four-lane

freeway, whereas more than 14,000

units are required on level terrain.

Functional classification, and

therefore capital costs, could be

reduced by accepting a lower level

of service. A lower level of service

would result in increased likelihood

of traffic congestion during more of

the day. The ministry may determine

that the social and economic impact

of such congestion balance (or

outweigh) reduced capital costs.

However, the importance and value

of free-flowing traffic may be less,

in light of the current need for fiscal

restraint, than it was in the past. We

believe the ministry should

consider the impact that providing

a lower level of service would have

on the costs and benefits related to

highway construction.

Recommendation

The ministry should review

the planning guidelines contained

in the Highway Functional

Classification Study. In particular,

it should confirm that functional

requirements associated with the

current level of service goals—and

the costs associated with meeting

those requirements—are consistent

with government fiscal policies.

Design Standards

Once the functional

classification of a highway is

established, the highway’s physical

characteristics are determined by

application of the ministry design

standards. These standards are

contained in the Highway

Engineering Design Manual,

published by the Engineering

Branch.

The design manual is based on

design policies of the

Transportation Association of

Canada (TAC) and the American

Association of State Highway and

Transportation Officials (AASHTO).

The general purpose of TAC and

AASHTO policies and standards is

to promote uniformity of design

features, in the interests of

maintaining the overall well-being

of the travelling public through the

provision of safe roads. The

ministry manual represents the

ministry’s interpretation of, and

instructions on how to apply, these

policies to British Columbia

highway projects. Similar design

manuals exist in other Canadian

provinces and the United States, as

well as in other countries.

Auditor General of British Columbia

1996/97 Report 3: Vancouver Island Highway Project: Planning and Design

We found the documentation

of the standards to be adequate.

However, we also found that the

rationale underlying the standards

is not always clearly described in

the highway design manual. The

addition of more commentary

explaining the highway design

standards would be of assistance

to consultants when they are

contemplating a design variance.

The bridge design manual, on the

other hand, offers better commentary

and rationale for many bridge

design elements.

Reviews of Design Standards

Independent Review

In November 1994, the ministry

initiated a review of the ministry’s

highway design standards. A

consultant was hired to determine

if the standards could be changed

in order to reduce costs while

maintaining an acceptable level

of safety.

At the end of the review, in

March 1995, the consultant

concluded that “British Columbia

highway design standards are

adequate based on the comparison

to the standards of other

jurisdictions and the literature

reviewed” and that “current

Ministry of Transportation and

Highways geometric standards are

considered to be minimum

standards and reductions are

unwarranted.” The suggestion was

made that a way to reduce the

capital cost of highway construction

would be by staging construction to

match capacity to demand.

The report also concluded that

risk had not been systematically

addressed in all design standards,

and that assessment of risk was

important in the application of

design standards.

Auditor General of British Columbia

Overpass on Inland Island Highway

Courtesy: Ministry of Transportation and Highways

The report identified four areas

for further review: road grades, lane

width, clear zones alongside roads,

and shoulder and median widths.

Internal Review of Standards

After receiving the consultant’s

report, the ministry began a further

internal review of its standards. The

project team made a number of

recommendations related both to

the standards themselves and the

process for developing, reviewing,

and maintaining them. In particular,

it was suggested that the ministry

“create standards that are flexible

and permit deviation under certain

conditions.”

In January 1996, in response to

budget pressures, the review of the

ministry’s road design standards

was assigned a higher priority. The

terms of reference drafted for the

review called for the implementation

of all cost savings measures that

could be identified, and the

inclusion of both lifecycle and

initial capital costs in economic

analysis. Improved cost-effectiveness

in the application of standards was

also sought, including deviating

from standards if doing so would

result in a better design at equal or

less cost.

The review committee

produced a draft final report in

June 1996, in which it identified a

number of areas in which savings

could be realized by adopting

different standards. The committee

also identified additional standards

for review, including: instituting

narrower lane and shoulder widths;

reducing design speed in urban

areas and in rural areas with

extreme topographical constraints;

and basing clear zone requirements

on design speed and traffic volume

rather than highway classification.

We believe that the

ministry should continue to

review its technical standards with

a view to identifying further

opportunities to achieve greater

cost-effectiveness without unduly

compromising safety.

Ongoing Review of Standards

The process for reviewing

and updating standards is, itself,

presently being reviewed as a result

of the ministry downsizing that

was taking place at the time of

our audit. As part of a ministry

restructuring, the Standards Section

of the Highway Engineering

Branch was reduced from seven

staff to two.

During recent years, technical

standards have been reviewed

annually, with suggestions for

changes being submitted to the

Standards Section. The process has

been reactive, and driven mainly

by technical, rather than economic,

considerations. Cost-effectiveness

has not, over the years, been

systematically taken into

consideration in the development

or review of standards. This has

been changing, however, and cost-

effectiveness of design standards

has been considered in some cases.

For example, cost-effectiveness was

considered in the initial decision to

adopt current standards for clear

zones alongside highways. Lifecycle

cost considerations have also been

considered in some of the ministry’s

design standards. For example,

weathering steel is now being used

in bridge construction to avoid the

requirement for periodic repainting.

However, these standards were

developed based on the experience

and expertise of ministry staff,

rather than as the result of any

specific lifecycle cost analyses.

Auditor General of British Columbia

1996/97 Report 3: Vancouver Island Highway Project: Planning and Design

Opportunity for Innovation

within Standards

As noted earlier in this report,

the establishment of the functional

classification of a highway, based on

forecast traffic volume, determines

much of the design characteristics of

the highway. During the preliminary

design process, design criteria are

established on the basis of the

functional classification of the

highway. Once the design criteria

are established, the designer has

only limited opportunity to produce

innovative designs; the ultimate

design solution involves meeting

the design criteria and design

standards.

Designers do not usually

attempt to produce innovative

designs that incorporate variances

to design standards. Using the

design standards, the designer

attempts to optimize the plan and

profile for the roadway (or roadways,

in the case of a divided highway or

interchange configuration) so that,

for example, minimum quantities of

fill need to be acquired, moved, or

removed from the project site. The

designer’s goal is to produce an

optimal design based on the design

criteria established for the project.

Currently it is the Technical

Review Committee that reviews

requests for variance from design

standards. Any variance must then

be approved by the Chief Highway

Engineer. This process is intended

to ensure that standards are applied

—and variances approved—in a

consistent manner.

The ministry’s Professional

Services staff state that they neither

expect nor desire rigid adherence to

standards, but rather want to ensure

that any deviation from standard is

appropriate and approved.

Conversely, Project Managers on

the Vancouver Island Highway

Project believe that the rest of the

ministry regards standards as being

prescriptive. The Project Managers

also believe that many of the

standards require practices that are

not cost-effective.

The approach of design

consultants is to be conservative in

developing designs because there is

little incentive to invest the time,

effort, and expense in developing

and justifying innovative approaches

to design.

We believe the ministry should

encourage designers to develop site-

specific design alternatives, including

variations to design standards,

where a more cost-effective design

can be achieved within the

appropriate performance and

safety requirements. Pavement

design, for example, is not tailored

to traffic and geotechnical conditions;

rather, the ministry’s “typical”

design is applied universally

regardless of conditions because

there is no incentive for designers

to perform the risk and cost-benefit

analyses required to support a

variance proposal.

Recommendation

The ministry should encourage

designers to consider cost-effective

alternatives that include variances

from ministry design standards.

Requests for variance from ministry

standards should be supported

by detailed risk and cost-benefit

analyses.

Auditor General of British Columbia

1996/97 Report 3: Vancouver Island Highway Project: Planning and Design

1988

In 1988, Cabinet approved the Vancouver Island Highway Project in principle based on a general “order

of magnitude” estimate of cost.

1989

In January 1989, the ministry requested Treasury Board approval to proceed with a program of major

highway system improvements for Vancouver Island. Scope of the project was described as:

■ staged upgrading of the Pat Bay Highway, between the Swartz Bay ferry terminal and McKenzie Avenue,

to freeway status;

■ staged upgrading of the Trans Canada Highway, between Tillicum Road and Goldstream Park, to

freeway status;

■ completion of the Trans Canada Highway, between Goldstream Park and Nanaimo, to a multi-lane

arterial highway standard; and

■ construction of a new freeway-standard Inland Island Highway around the urban area of Nanaimo and

between Parksville and Campbell River.

The cost of the project, based on very preliminary engineering, was estimated to be something in excess

of $600 million (1988 dollars). It was proposed that work be completed by 1996.

In February 1989, Treasury Board advised the ministry that the request had been deferred pending more

detailed plans and cash flow projections.

1990

In January 1990, the ministry presented a package of alternatives for upgrading different sections of the

Vancouver Island Highway to Cabinet. This presentation was based on a submission to Treasury Board

that had been made in October 1989. The recommended scope for the project was:

■ upgrading Pat Bay Highway, from Swartz Bay to Saanich Municipal Hall, to four-lane freeway;

■ upgrading the Trans Canada Highway to Goldstream Park to four-lane freeway;

■ upgrading the Trans Canada Highway from Goldstream Park to Nanaimo to four-lane expressway;

■ building a new four-lane expressway through Nanaimo, plus the designing and acquiring right-of-way

for a freeway bypass; and

■ building a new four-lane freeway from Parksville to Menzies Bay.

The budget estimate for the recommended scope was $1,425 million (1989 dollars). The ministry

cautioned that the estimate was actually within a range of $1,150 million to $1,500 million. The work

was to be completed by 1996.

At the time of the presentation to Cabinet, Treasury Board had instructed the ministry to identify

significant reductions in program cost. Treasury Board set target levels of $1,100 million, $900 million,

and $700 million for the development of alternative project scope packages.

In May 1990, Cabinet approved a project scope that included: an expressway on the Pat Bay Highway,

freeway status on the Trans Canada Highway from Tillicum Road to Millstream Road, an expressway

from Millstream to Goldstream Park, an expressway from Goldstream Park to Nanaimo, an Inner Route

expressway through Nanaimo instead of the Nanaimo Bypass freeway, and an expressway from Parksville

to Menzies Bay north of Campbell River. Estimated cost of the project was $1,100 million (1989 dollars).

Exhibit 5

Scope, Schedule, and Budget for the Vancouver Island Highway Project

1996/97 Report 3: Vancouver Island Highway Project: Planning and Design

Auditor General of British Columbia

In May 1990, Treasury Board approved the project scope but requested further submissions concerning

total project budget, annual cash flow, and project completion date before final approval would be

given. Within the approved scope:

■ The Pat Bay Highway was to be upgraded to four-lane expressway standard, with interchanges at

McKenzie Avenue, Beacon Avenue, Island View Road, and Land’s End Road. The ability to expand the

highway south of Island View Road to six-lane freeway was to be protected.

■ The Trans Canada Highway was to be upgraded to four-lane freeway from Victoria to Millstream

Avenue, and four-lane expressway from Millstream Road to Goldstream Park, with interchanges at

McKenzie Avenue, Helmcken Road, and Highway 1A. There were to be intersections with signals at

Millstream Road and Amy Road. The ability to expand the highway east of Millstream Road to six lane

freeway and place an interchange at Millstream Road was to be protected.

■ Goldstream to Nanaimo was to be upgraded to four-lane expressway standard except between the

Shawnigan Lake Road and Bamberton, with frontage roads placed alongside existing four-lane sections

and median barriers to be installed on existing four-lane sections.

■ Highway 19 through Nanaimo and between Nanaimo and Parksville was to be maintained at its

current standard. A second route through Nanaimo was to be constructed to four-lane expressway

standard, with access limited to major intersections with signals. Necessary steps to protect a corridor

for a freeway bypass of Nanaimo were to be taken.

■ The inland route from Parksville to Menzies Bay was to be built to four-lane expressway standard from

Parksville to Courtenay, and to two-lane expressway standard from Courtenay to Menzies Bay. The

ability to expand the latter section to four lane expressway was to be protected.

1990–1993

As already stated, in May 1990 the budget was estimated to be $1,100 million (1989 dollars), based on

planning level information. The ministry expected that by September of that year it would be able to

upgrade the budget estimate for the project to a preliminary design estimate level. From May 1990 to

May 1993, the ministry continued to refine the scope, schedule, and budget for the project. During this

time, the ministry made several major scope revisions including:

■ deleting the Beacon Avenue interchange at the request of the Town of Sidney;

■ adding four-laning from the Malahat Summit to Bamberton;

■ downgrading the standards from Goldstream to Nanaimo to arterial standard;

■ extending the Nanaimo parkway northward from Mary Ellen Road to Superior Road;

■ connecting the parkway at Northfield Road rather than East Wellington Road at the request of the City

of Nanaimo; and

■ revising the connection at the north end of the Inland Island Highway.

The net effect of these scope changes was a reduction of $27 million. The ministry also recommended

the following additional scope changes:

■ adding an interchange at Millstream and the Trans Canada Highway;

■ upgrading Millstream Road to four lanes between the Trans Canada Highway and Goldstream Avenue;

■ extending Millstream Road south to Highway 14; and

■ simplifying the interchange at Thetis Lake overpass.

In May 1991, planning for the Victoria portion of the Trans Canada Highway and the Pat Bay Highway

ceased, pending the outcome of a Capital Regional District planning study. The results of the study were

presented in May 1994.

Auditor General of British Columbia

1996/97 Report 3: Vancouver Island Highway Project: Planning and Design

1993

In May 1993, the ministry estimated the budget for the project to be $1,226.4 million (1993 dollars).

In August 1993, Treasury Board approved a scope, schedule, and budget for the Vancouver Island

Highway Project. The approved scope was based on earlier submissions but included a number of scope

changes:

■ The Beacon Avenue interchange at Sidney was deleted, and the existing intersection was to be

improved.

■ The intersection of Millstream Road and the Trans Canada Highway was upgraded to an interchange.

■ The Millstream Connector, a four-lane arterial road from the Millstream Interchange to Highway 14,

was added to the project.

■ A new connector road was to be built north of the Victoria General Hospital.

■ The section of the Trans Canada Highway from Goldstream Park to Nanaimo was downgraded from an

expressway to a four-lane divided arterial highway.

The approved budget was $1,227 million (1993 dollars). The schedule called for completion of the

project in 1999.

1994

In November 1994, facing a budget overrun of $180 million (attributed to scope changes proposed by

the ministry and land acquisition costs, and annual spending limits imposed on the project) the

Transportation Financing Authority asked the ministry to identify opportunities to reduce the scope of

the project and the annual expenditures for the project. The ministry responded with alternatives that

delayed project completion or reduced the scope of the project, thereby reducing annual expenditure in

future years. Proposed scope changes included:

■ eliminating of any further work on the Pat Bay Highway, including the interchange planned for Island

View Road and improvements to the highway between Quadra Street and Martindale Road;

■ deferring the widening, lane separation, and reduction of the number of access points for the Trans

Canada Highway on either side of Goldstream Park; and

■ deferring some work on the northern portion of the Inland Island Highway, reducing some planned

four-lane sections to two lanes, and deleting some logging road grade separations.

1995

In January 1995, Treasury Board approved the Transportation Financing Authority’s recommended

reduction in scope and extended the completion date for the project to the year 2000.

In October 1995, the Transportation Financing Authority approved another scope reduction to keep the

project within the budget of $1,263.6 million (1995 dollars). The scope reduction substituted a

signalized intersection and flyover ramp from the Trans Canada Highway to McKenzie Avenue for the

planned full diamond interchange. This change will save $16 million.

1996

In 1996, the Transportation Financing Authority approved an addition of $12.3 million to the project for

the Duke Point Interchange—required to accommodate traffic that will be generated by the new ferry

terminal. With adjustments of $20.4 million to reflect inflation, the budget for the project is currently

$1,296.3 million (1996 dollars).

1996/97 Report 3: Vancouver Island Highway Project: Planning and Design

Auditor General of British Columbia

The Ministry is pleased to receive

the critique of the Auditor General

related to planning and design for the

Vancouver Island Highway Project. In

general, we agree with the “Overall

Conclusions” and concur with the “Key

Findings.” The Ministry is continually

looking to improve the way it conducts

its business and considers comments

from outside the Ministry as extremely

helpful as they provide a fresh

perspective.

Ministry Response to “Overall

Conclusions”:

The Ministry is pleased with

the conclusions that the Vancouver

Island Highway Project will provide

good value for money and that the

Ministry’s planning and design

standards are generally adequate.

It is also of value to receive your

opinion that the project team has

developed appropriate design

management processes, including

an adequate Quality Management

program.

We share the conclusion that

there was insufficient planning during

early phases of the project and that

subsequent work phases have

addressed most of these deficiencies.

Your conclusion that the

Ministry would benefit from a review

of standards and their application to

ensure cost-effectiveness is supported

and actions are underway to respond

to this finding.

Ministry actions to address

comments and recommendations from the

audit report:

■ The Ministry recognizes that there

was insufficient planning and

documentation of planning during the

early stages of the Vancouver Island

Highway Project, though most of the

deficiencies were addressed during the

subsequent planning and design

phases. In future, it is the firm

requirement of both the Ministry and

of the BC Transportation Financing

Authority that all potential projects

will have adequate early planning in

the form of system and corridor

planning, project needs identification,

analysis of alternative improvement

options and project scope/cost estimate

development. The Ministry is

currently developing policy and

procedure documents to facilitate

consistent planning practices.

Deliverables will be refinement of the

Provincial Highway Plan, regional

systems plans and highway corridor

plans and strategies to provide a

comprehensive context for project

justification and definition.

■ The Ministry agrees that the more

attention to estimating lifecycle cost is

appropriate for planning, design, and

standards development and review.

Lifecycle costing, and other formal

economic review techniques, are now

included in the Ministry’s planning

processes. In future, the Ministry

intends to incorporate into its design

processes, in addition to estimated

capital cost, the estimated lifecycle cost

of each alternative being evaluated.

ministry response

Auditor General of British Columbia

1996/97 Report 3: Vancouver Island Highway Project: Planning and Design

■ The Ministry agrees that formal risk

and cost-benefit analyses should be

developed for requests for variance

from standards by the project: to

document such requests, to improve

communication within the Ministry,

and to facilitate development of cost-

effective alternatives by designers that

include variances from design

standards.

■ The Ministry agrees that guidelines for

determining functional classification of

highways require ongoing review to

ensure cost-effectiveness and consistency

with government policies. The

Ministry recognizes that, historically,

it has placed emphasis on safety and

reliability in the development of its

design standards, and that there has

been insufficient use of formal cost-

benefit and risk analysis techniques in

standards development and review. As

noted in the report, the Ministry has

recently concluded external and

internal reviews of its design standards,

including consideration of both

lifecycle and capital costs to improve

the cost-effectiveness of standards. In

future, the Ministry intends to take a

more systematic and proactive

approach to standards reviews.

■ The Ministry agrees that the different

Ministry groups involved in the project

should view issues from an overall

Ministry perspective rather than

seeing them in terms of their own

concerns, priorities and accountability.

The groups within the Ministry are

working together to modify their

approach to the project, beginning with

understanding and considering issues

from each others’point of view.

■ The Ministry agrees that a formal

program to assess the functional and

cost-effectiveness of “as constructed”

designs and capture this experience

in its corporate memory would be

beneficial. The project is currently

developing processes for project close

out, including providing feedback to

the Ministry and consultants on

project management and technical

lessons learned. In future, the

Ministry intends to investigate

means to measure effectiveness of

“as constructed” designs from a

longer term perspective so that the

experiences may be communicated

throughout the Ministry.

It is apparent that the audit team

gained a solid understanding of the

planning and design processes as applied

to the Vancouver Island Highway Project

both in the late 1980’s as well as current

practice. This substantial appreciation of

the progressive enhancement of planning

and design processes has contributed in a

very tangible manner to the value of the

audit findings. We sincerely wish to

thank you and your staff for the

professional approach undertaken

throughout the audit.

appendices

1996/97 Report 3: Vancouver Island Highway Project: Planning and Design

Auditor General of British Columbia

1996/97 Audit Reports

Issued to Date

Report 1

Performance Audit

Management of

Child Care Grants

Report 2

Crown Corporation

Governance Study

Report 3

Performance Audit

Vancouver Island

Highway Project:

Planning and Design

appendix a

Office of the

Auditor General:

Audit Objectives

and Methodology

Audit work performed by the

Office of the Auditor General falls

into three broad categories:

■ Financial auditing;

■ Performance auditing; and

■ Compliance auditing.

Each of these categories has

certain objectives that are expected

to be achieved, and each employs

a particular methodology to reach

those objectives. The following is a

brief outline of the objectives and

methodology applied by the Office

for performance auditing.

Performance Auditing

Purpose of Performance Audits

Performance audits look at

how organizations have given

attention to economy, efficiency

and effectiveness.

The concept of performance

auditing, also known as value-for-

money auditing, is based on two

principles. The first is that public

business should be conducted in a

way that makes the best possible

use of public funds. The second is

that people who conduct public

business should be held accountable

for the prudent and effective

management of the resources

entrusted to them.

The Nature of Performance Audits

An audit has been defined as:

. . . the independent, objective

assessment of the fairness of

management’s representations on

performance, or the assessment of

management systems and practices,

against criteria, reported to a

governing body or others with

similar responsibilities.

This definition recognizes that

there are two primary forms of

reporting used in performance

auditing. The first—referred to

as attestation reporting—is the

provision of audit opinions on

reports that contain representations

by management on matters

of economy, efficiency and

effectiveness.

The second—referred to as

direct reporting—is the provision

of more than just auditor’s opinions.

In the absence of representations

by management on matters

of economy, efficiency and

effectiveness, auditors, to fulfill

their mandates, gather essential

information with respect to

management’s regard for value for

money and include it in their own

reports along with their opinions. In

effect, the audit report becomes a

partial substitute for information

that might otherwise be provided

by management on how they have

discharged their essential value-for-

money responsibilities.

The attestation reporting

approach to performance auditing

has not been used yet in British

Columbia because the organizations

we audit have not been providing

comprehensive management

representations on their

performance. Indeed, until recently,

the management representations

approach to value for money

was not practicable. The need to

Auditor General of British Columbia

1996/97 Report 3: Vancouver Island Highway Project: Planning and Design

appendix b

1996/97 Report 3: Vancouver Island Highway Project: Planning and Design

account for the prudent use of

taxpayers’ money had not been

recognized as a significant issue

and, consequently, there was

neither legislation nor established

tradition that required public

sector managers to report on a

systematic basis as to whether

they had spent taxpayers’ money

wisely. In addition, there was no

generally accepted way of reporting

on the value-for-money aspects of

performance.

Recently, however, considerable

effort has been devoted to

developing acceptable frameworks

to underlie management reports on

value-for- money performance,

and public sector organizations

have begun to explore ways of

reporting on value-for-money

performance through management

representations. We believe that

management representations and

attestation reporting are the

preferred way of meeting

accountability responsibilities and

are actively encouraging the use of

this model in the British Columbia

public sector.

Presently, though, all of our

performance audits are conducted

using the direct reporting model,

therefore, the description that

follows explains that model.

Our performance audits

are not designed to question

government policies. Nor do they

assess program effectiveness.

The Auditor General Act directs the

Auditor General to assess whether

the programs implemented to

achieve government policies are

being administered economically

and efficiently. Our performance

audits also evaluate whether

members of the Legislative

Assembly and the public are

provided with appropriate

accountability information about

government programs.

When undertaking performance

audits, auditors can look either at

results, to determine whether value

for money is actually achieved, or

at managements’ processes, to

determine whether those processes

should ensure that value is received

for money spent.

Neither approach alone can

answer all the legitimate questions

of legislators and the public,

particularly if problems are found

during the audit. If the auditor

assesses results and finds value for

money has not been achieved, the

natural questions are “Why did

this happen?” and “How can we

prevent it from happening in

future?” These are questions that

can only be answered by looking at

the process. On the other hand, if

the auditor looks at the process and

finds weaknesses, the question that

arises is “Do these weaknesses

result in less than best value being

achieved?” This can only be

answered by looking at results.

We try, therefore, to combine

both approaches wherever we can.

However, as acceptable results

information and criteria are often

not available, our performance

audit work frequently concentrates

on managements’ processes for

achieving value for money.

We seek to provide fair,

independent assessments of

the quality of government

administration. We conduct our

audits in a way that enables us to

provide positive assessments where

they are warranted. Where we

cannot provide such assessments,

we report the reasons for our

reservations. Throughout out

audits, we look for opportunities

Auditor General of British Columbia

to improve government

administration.

Audit Selection

We select for audit either

programs or functions administered

by a specific ministry or public

body, or cross-government

programs or functions that apply

to many government entities. There

are a large number of such programs

and functions throughout

government. We examine the larger

and more significant ones on a

cyclical basis.

We believe that performance

audits conducted using the direct

reporting approach should be

undertaken on a five- to six-year

cycle so that members of the

Legislative Assembly and the

public receive assessments of all

significant government operations

over a reasonable time period.

Because of limited resources, we

have not been able to achieve this

schedule.

Our Audit Process

We carry out these audits in

accordance with the value-for-

money auditing standards

established by the Canadian

Institute of Chartered Accountants.

One of these standards requires

that the “person or persons carrying

out the examination possess the

knowledge and competence

necessary to fulfill the requirements

of the particular audit.” In order to

meet this standard, we employ

professionals with training and

experience in a variety of fields.

These professionals are engaged

full-time in the conduct of

performance audits. In addition, we

often supplement the knowledge

and competence of our own staff by

engaging one or more consultants,

who have expertise in the subject of

that particular audit, to be part of

the audit team.

As performance audits, like

all audits, involve a comparison

of actual performance against a

standard of performance, the CICA

prescribes standards as to the

setting of appropriate performance

standards or audit criteria. In

establishing the criteria, we do not

demand theoretical perfection from

public sector managers. Rather, we

seek to reflect what we believe to be

the reasonable expectations of

legislators and the public. The

CICA standards also cover the

nature and extent of evidence that

should be obtained to support the

content of the auditor’s report, and,

as well, address the reporting of the

results of the audit.

Auditor General of British Columbia

1996/97 Report 3: Vancouver Island Highway Project: Planning and Design

Compiled and typeset by the Office of the Auditor General of British Columbia

and published by the Queen’s Printer for British Columbia

Victoria 1996