Bluenose II rebuild problems plagued by 'baffling' decisions

The restoration of the Bluenose II is delayed and over-budget because of poor planning, weak oversight and the decision to hand the job to a government department with very little experience managing construction projects, says Nova Scotia's auditor general.

Michael Pickup released a scathing report on the project on Wednesday and expressed bewilderment that the work on the schooner was overseen by the Department of Communities, Culture and Heritage.

"No one has been able to provide me as good answer as to why this department was given the lead," he told a news conference after releasing his report on the project.

"To this day, everybody in government is essentially left scratching their heads as to why this department is in charge.

"It is baffling that the senior leadership of government allowed this to happen."

• Read Auditor General Michael Pickup's report here

Hours after Pickup's report was released, Premier Stephen McNeil announced the Department of Transportation and Infrastructure Renewal will oversee the completion of the Bluenose II project.

"The lessons are clear: the auditor general says any time capital projects are being done, it should be handled by the Department of Transportation," McNeil told reporters.

McNeil asked Pickup's office to look into the project a year ago after calling the project a "boondoggle."

'I'm disappointed by the failure'

When the restoration was announced in 2009 by the province and the federal government, the budget was set at $14.4 million. Half of that budget was to come from a federal infrastructure fund but the federal government pitched in only $4 million because the project failed to meet deadlines.

The bill for the rebuild has now grown to nearly $20 million, according to the latest figures released on Tuesday by the Nova Scotia government. An additional $4.5 million is still in dispute between the province and the Lunenburg Shipyard Alliance, which is the consortium hired to do the work on the Bluenose II.

Pickup said Wednesday the cost has the potential to grow even further.

"Let's be clear," Pickup said. "This means the actual cost to Nova Scotia is nearly two times the initial budget, with the potential to go to three times the initial budget."

As the province scrambled to meet federal deadlines, Pickup said it ignored a number of red flags about the project because it was "optimistic" that things would just work out.

"The rush to meet federal funding deadlines resulted in inadequate attention to a number of important project details," said Pickup.

"I'm disappointed by the failure of government leadership to effectively prevent and resolve these many issues and to have been unable to manage their way out of this for so long."

$19,572,990 to date

When asked if the government did anything right when it came to the Bluenose II project, Pickup chuckled and paused before saying, "I assume you don't want an answer to that."

The Department of Communities, Culture and Heritage says taxpayers have contributed $19,572,990 to date.

That figure doesn't include the cost of installing a hydraulic steering system on the vessel. That modification was needed in order to properly manoeuvre the schooner's new three-tonne steel rudder.

The final bills for the steering system fix aren't in yet, but the equipment and installation are expected to cost about $350,000.

Pickup made it clear who dropped the ball on the restoration project.

"I think the people accountable, I think we're pretty clear, that is the government and mainly the Department of Communities, Culture and Heritage who were responsible to initiate and plan this," he said.

"They were the ones responsible to enter into the contracts with the various parties, they're the ones with responsibility for oversight," he said.

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The premier's deputy minister, Dave Darrow, also told a legislative committee last fall that the Department of Communities, Culture and Heritage should not have been put in charge of the restoration because it lacked the necessary expertise to lead such a project.

Highlights of the AG's report:

• "Government, as a whole and the Department of Communities, Culture and Heritage specifically, did not adequately plan the Bluenose II restoration project."
• The department did not appropriately define the roles and responsibilities for contractors or government participants in the project.
• The department set "overly optimistic" end dates.
• The department did not ensure a realistic and complete project budget.

When it comes to assessing a project of this complexity and scope, Pickup says potential risks should be identified and ranked that allows for some risks to be avoided and other mitigated.

But in the case of the Bluenose II, there was only a half-day risk management meeting in November of 2009. The report notes that the wooden boat experts on the team did not attend that meeting.

"In simple terms, that meant a group of people unfamiliar with building wooden boats were trying to assess the risks associated with building a wooden boat," he said.

The rebuild of Nova Scotia's iconic schooner was supposed to be completed in 2012, that date has now been pushed to sometimes in 2015.

The 43-metre vessel was launched in 1963 and is a replica of the original Bluenose, a 1921 Grand Banks fishing schooner that won worldwide acclaim.