Northern contractors left out of Nunavut Housing Trust?
You often hear complaints from the Nunavut Housing Corp. about how contracting costs in the North are too high compared with southern prices.
In some respects, it is. But then again, to continue the comparison with the South, so are wages, accommodations, shipping, the cost of living — in other words, the cost of doing business in the North is higher than the cost of doing the same business in the South.
Four years ago, the federal government announced the Nunavut Housing Trust initiative to build between 700 and 750 social housing units across Nunavut.
Local contractors waited for their chance to tender these projects. However, they were disappointed.
The housing corporation decided not to tender a large percentage of the work and carried out some sole sourced labour contracts and passed the Trust money to local housing organizations to hire workers under the direction of the housing corporation and knowing their limited expertise in project management, purchased material and supplies for this construction.
Now, the housing corporation has announced a $60 million over-expenditure that they have to cover. So how did that happen?
• poor budgeting and record keeping — yes, this would have identified issues sooner;
• wages were over budget by approximately 70 per cent — yes, wages were paid to southern and local workers who were waiting for materials to arrive and for construction to progress;
• inexperienced and-or unqualified people were used to purchase construction material and deliver them to sites;
• additional materials were flown in by charter because of poor planning;
• chartered flights to other provinces were used to bring southern workers to communities these were workers hired directly from local housing organizations.
Damages done to Nunavut
• Nunavut and local contracting companies were unable to tender for construction work and grow their businesses;
• southern construction companies hired with the blessing of the Nunavut Housing Corp. started working on other projects in the communities, negatively impacting northern contractors;
• federal and Nunavut income and corporate tax revenue left Nunavut.
Are there advantages to contracting? Absolutely:
• the contractor abides by the NNI policy or faces penalties;
• the contractor assumes the risks associated with purchasing the correct materials and the risk of employee down-time;
• contractors ensure local workers are hired as per the NNI policy;
• contractors use local hotels and restaurants, thus supporting local businesses;
• using contractors means fewer housing corporation employees being paid by the taxpayer, because a lot of the management personnel required to manage the Nunavut Housing Trust would not be required.
Did the housing corporation and local housing organizations abide by NNI policies? Did they support local hotels and businesses?
No, in many cases they directly hired southern workers, used public housing and and supplied work sites via air freight. Why was it okay to bypass the tendering process?
Wouldn’t it have been better to have undertaken a joint initiative with northern businesses who have the knowledge and expertise to manage these types of projects?
Yes, contracting is expensive in Nunavut. But in comparison, is it really that expensive?
(Name withheld by request)
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