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A Flawed Decision

The Nova Scotia Department of Transportation and Infrastructure Renewal
originally released its plans to begin internal road building activities
in the spring of 2011.

The Nova Scotia Department of Transportation and Infrastructure Renewal originally released its plans to begin internal road building activities in the spring of 2011. Those plans only became public through a Freedom of Information request. It is important to note these plans were completed with zero consultation with industry.

The Nova Scotia Road Builders Association reviewed those plans, one for chip seal operations and one for a mobile asphalt plant. The conclusion of the NSRBA, was that both plans were flawed, unrealistic and unachievable. However, because we are an industry-based organization, those comments were not readily accepted. In particular the NSRBA pointed to unrealistic production goals in the chip seal plan and inaccurate costing in the asphalt plant plan.

A different light has now been brought to bear with the completion of the 2011 chip seal season and the attempts in 2012 of the department to do both chip seal and some paving with their plant.

The business plan of the department stated they would do 55 km of double chip seal and 311 km of singles in 2011. They completed approximately 40 double chip seal km and zero singles. Their productivity, on the double chip seal, was in the range of 1 km/day versus the 4 km they projected in their business plan. A review of their work indicates significant quality issues with a number of the roads they did complete. These will need to be fixed at additional expense to taxpayers. Their basic cost/km was significantly higher than that of the private sector.

Their business plan for the asphalt plant had them working in three separate locations in 2012. The plant was supposed to be operational by the end of June; it was not so until early August. It now appears that they will tender out at least one of the three locations to the private sector. Productivity and quality of the paving operation will soon be measurable.

The true answer to the question of why the department took this action is still not clear. They offer specious arguments about lack of competition and cost savings.

Any “competition” issues are seen by the industry as being a function of poor tendering practices. If you tender a small job, particularly in remote locations, it will be expensive for anyone to do. This is a function of mobilization costs of men and materials and the lack of economy of scale you enjoy with a reasonably sized job.

As the industry forecast, competition is perhaps at its most intense level of any time in history in this province. Taxpayers are getting excellent value from the private sector.

The government likes to boast that private sector prices have dropped because of their activity. There is zero truth to that statement. This is due to the fact that they do not compete for business, but only take business away.

Their estimates of cost savings are math imagination at its best. They like to compare the cost of private sector chip seal in 2008 and 2009 when the average job size was less than 2 km to that realized in 2011 when the average size of a job was 7.5 km. Another huge factor is the fact that they required prime to be used on the 2008/09 jobs. This alone is a huge per-square-metre cost that no longer exists. When they began chip sealing they dropped prime as a requirement. The facts are that if you add up the additional cost/km of their work, the capital costs they incurred to get into chip sealing, the startup costs and the costs of repairs that need to be made to their work, the taxpayer is behind approximately $2 million rather than having saved a similar amount per their statements.

The amount of work the department has taken away from the private sector is considerable. The typical budget for private sector chip seal has been in the 25-km range per season, the department is attempting to do 300. They are attempting to pave 80,000 tonnes of asphalt per season, which is approximately 10% of the current paving budget. If they were successful in completing what they planned, they would be one of the largest roadbuilding entities in the province.

The industry, through the NSRBA, has held and will continue to hold the department accountable for this mistake in direction, which is both damaging to the industry and a great waste of taxpayers’ money.

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