Only 20 built out of 96 planned last year

The Government of Nunavut's $200-million social housing construction scheme got off to an ill-prepared start in its first year, Sheila Fraser, the Auditor General of Canada, said in a special report on the Nunavut Housing Corp. tabled in the legislative assembly last week.

Of 96 social housing units that the housing corporation was to build in the summer of 2007, only 20 had been finished by last December.

"Already short-staffed, with 23 of 89 positions vacant at the end of December 2007, the corporation is facing a significant challenge in carrying out the strategy…" Fraser said.

The auditor general said the housing corporation actually did a good job figuring out what kind of housing units are needed in Nunavut.

And she pointed out that in 2006, the Crown corporation received an award from the Canada Mortgage and Housing Corp. for the five-plex design it's using for many of the new units.

But she also found the understaffed housing corporation did not prepare well for the construction phase of the program and that "difficulties began to develop as soon as it [the program] began."

Those problems include workers not showing up to construction sites, delays in shipping construction materials to communities and uncertainty about whether apprentices will work enough hours to become licenced tradespeople.

The auditor general found these problems arose, in part, because the $200-million social housing construction plan is the biggest that Nunavut has ever taken on.

At the same time, she said the Crown corporation is badly understaffed, with 23 of 89 positions sitting vacant by the end of last year.

And she also found that corporation staff did not do enough to figure out what risks it faced or plan how to manage them.

That, in turn, led to these types of problems:

• in six communities, contractors either showed no interest in bidding for contracts, or made bids that were so high, no contract was awarded;
• two contractors withdrew their bids because they felt they couldn't meet training and education requirements;
• the corporation's district offices acted as project managers in 12 communities, "which added to the workload of staff who were already overworked;"
• construction materials either arrived late; were sent to the wrong communities; were left in a Montreal warehouse; or were damaged.

Fraser also criticized the process that led to the selection of Aaruja Development Corp. of Clyde River as the contractor responsible for receiving, repackaging and sending building material to Nunavut communities.

She said housing corporation officials did not properly evaluate the three proposals that were submitted for the job, all of which were incomplete.

Although she didn't refer to the Aaruja firm by name, she said corporation staff did no background checks on the winning bidder.

If they had, they would have discovered that Aaruja had limited experience in marshalling and repackaging construction material, and had limited storage space.

The resulting fiasco cost the corporation at least $500,000 to move construction material left behind in Montreal to a new contractor's premises.

That figure does not include the cost of replacing damaged material for reshipment to affected communities. The housing corporation is still doing an inventory of all material shipped to communities to figure out how much was damaged last year.

The housing corporation cancelled its contract with Aaruja last December, and instead chose Illamar Marshalling Inc. of Chesterville, Ont., near Ottawa, to prepare future batches of construction supplies.

Of the 76 unfinished units, the auditor general's staff found that work was:

• 66 per cent complete in the Kivalliq region;
• 48 per cent complete in the Kitikmeot region;
• 81 per cent complete in the Baffin region.

In addition to the 96 units that were supposed to be built last year, under the housing corporation's plan, 236 are to be built this year, 310 next year and 83 in 2010.

But Fraser said in her report that the program's first-year screw-ups raise doubts about whether the planned number of units can be constructed on schedule and on budget.

The $200-million social housing scheme flows from a 2006 announcement made by Stephen Harper's Conservative government in its first budget.

The money is to be managed within a special pot called the Nunavut Housing Trust. It's expected to pay for about 725 new dwelling units.

Part of the GN's plan is to use the Nunavut Housing Trust project for trades training and apprenticeships.

Last week's auditor general's report is a part of a series of special performance audits that Fraser's officials are conducting on selected Nunavut government agencies and departments.