Report of the Auditor General of Québec to the National Assembly for

Similar documents
Report of the Auditor General of Québec to the National Assembly for

Report of the Auditor General of Québec to the National Assembly for Highlights Winter 2017

Report of the Auditor General of Québec to the National Assembly for

Report of the Auditor General of Québec to the National Assembly for

Report of the Auditor General of Québec to the National Assembly for

VÉRIFICATEUR GÉNÉRAL DU QUÉBEC. Report to the National Assembly for Volume II. Highlights

VÉRIFICATEUR GÉNÉRAL DU QUÉBEC. Report to the National Assembly for Volume I. Highlights

Report of the Auditor General of Québec to the National Assembly for

An Act to establish the Fund for the promotion of a healthy lifestyle

THE QUÉBEC ECONOMIC PLAN. March Health BUDGET Accessible, Quality Health Services

Québec. Laws and Regulations Volume 135. Legal deposit 1st Quarter 1968 Bibliothèque nationale du Québec Éditeur officiel du Québec, 2003

REPORT OF THE AUDITOR GENERAL OF QUÉBEC TO THE NATIONAL ASSEMBLY FOR AUDIT OF FINANCIAL INFORMATION AND OTHER RELATED WORK

Bill 19 (2013, chapter 1)

Appropriation Act No. 2,

Appropriation Act No. 1,

TAX HOLIDAY FOR LARGE INVESTMENT PROJECTS THI INITIAL CERTIFICATE APPLICATION FORM

TAX CREDIT PROGRAMS FOR IFCs

We would appreciate receiving a copy of the English translation of our comments.

Appropriation Act No. 1,

Budgetary Process and Documents

Appropriation Act No. 2,

Expenditure Budget. Supplementary Estimates 1

Appropriation Act No. 2,

Appropriation Act No. 1,

June 4-5, 2018 Hôtel Le Concorde Québec City

CANADA QUÉBEC AGREEMENT ON ENGLISH-LANGUAGE SERVICES TO

Value-for-Money Audit Fall 2011

DIRECTIVE SUR LA GESTION DES PROJETS MAJEURS D INFRASTRUCTURE PUBLIQUE

BULLETIN D INFORMATION

TAX CREDIT PROGRAMS FOR IFCs

The Budgetary Process Supporting the Pre-election Report

TAX ASSISTANCE FOR SCIENTIFIC RESEARCH AND EXPERIMENTAL DEVELOPMENT.

expenditure Budget

INTRODUCTION. Please note that the masculine gender, when used in the text, designates both women and men.

Bill 415 (1998, chapter 9) An Act to establish a fund in respect of the ice storm of 5 to 9 January 1998

2.0 Total Health Expenditure by Source of Finance

VOLUME PUBLIC ACCOUNTS CONSOLIDATED FINANCIAL STATEMENTS OF THE GOUVERNEMENT DU QUÉBEC. Fiscal year ended March 31, 2017

Québec, December 2003

BULLETIN D INFORMATION

An Act to amend the Act respecting the Ministère de la Culture et des Communications

Bill 9 (1999, chapter 11) An Act respecting Financement-Québec

Québec. Table of Contents Acts 2017 Regulations and other Acts Draft Regulations Index

VÉRIFICATEUR GÉNÉRAL DU QUÉBEC. Report to the National Assembly for Volume I. Highlights

An Act to establish an early childhood development fund and to amend the Act to establish the Fund for the promotion of a healthy lifestyle

VOL. 6 ESTIMATES AND ANNUAL EXPENDITURE MANAGEMENT PLANS OF THE NATIONAL ASSEMBLY AND PERSONS APPOINTED BY THE NATIONAL ASSEMBLY

Personal Taxation Statistics. (Taxation Year 1995) SUMMARY. Personal income tax statistics for taxation year 1995

TRANSLATION. We would appreciate receiving a copy of the English translation of our comments.

Bill 70 (2016, chapter 25) An Act to allow a better match between training and jobs and to facilitate labour market entry

BULLETIN D INFORMATION

Bill 123 (2010, chapter 37) An Act respecting the amalgamation of the Société générale de financement du Québec and Investissement Québec

2018 FALL ECONOMIC UPDATE SUMMARY QUÉBEC

Bill 24 (2006, chapter 32)

INFORMATION DOCUMENT ON THE APPLICATION OF SECTION 28 OF THE PETROLEUM RESOURCES ACT (ESTABLISHMENT OF MONITORING COMMITTEES)

Caisse Desjardins du Nord de Sherbrooke. Transit no.: 50030

Mayoress Report. For 2015

An Act respecting the conditions of employment in certain sectors of the clothing industry and amending the Act respecting labour standards

An Act respecting the distribution of financial products and services

Bill 117 (2011, chapter 1) An Act giving effect to the Budget Speech delivered on 30 March 2010 and to certain other budget statements

Quebec budget summary

June 4-5, :30 a.m. 4:30 p.m. Hôtel Le Concorde Québec City

Bulletin d information

expenditure Budget

Special Report of the Auditor General of Québec to the National Assembly Regional Economic Intervention Fund, "regional investment funds" component

October 29, 2010

Caisse d économie solidaire Desjardins. Transit no.: 92276

Caisse Desjardins du Nord de Sherbrooke. Transit no.: 50030

McGill University Health Centre Foundation Financial Statements For the year ended March 31, 2016

T.B , Senior staff of school boards and of the Comité de gestion de la taxe scolaire de l Île de Montréal Certain conditions of employment

Tax Assistance for Scientific Research and Experimental Development

Estimates and Annual Expenditure Management Plans of the National Assembly and Persons Appointed by the National Assembly

COMBINED FINANCIAL STATEMENTS

INCENTIVES FOR INNOVATION IN QUÉBEC DOCUMENT PREPARED BY NOUR SAADI ET AURÉLIE LANCTÔT 1 MARCH 7 TH 2016

Volume 2 PUBLIC ACCOUNTS

REGULATION PERTAINING TO FINANCIAL MANAGEMENT

TASK FORCE ON TAX ASSISTANCE. for the resource regions and the new economy. Discussion paper

Régie des rentes du Québec. When you

EXPENDITURE BUDGET

Bill 38 (2015, chapter 17) An Act to allow the Caisse de dépôt et placement du Québec to carry out infrastructure projects

Analysis of certain measures implemented by the Québec government on the tax burden of Quebecers

THE CONCEPT OF GUARANTEED EXPERT COMMITTEE PROGRESS REPORT MINIMUM INCOME AND ITS APPLICATIONS

Caisse Desjardins de l Est du Plateau. Transit no.: 30504

BUDGET budget Plan

Case Study: Botswana s Management of the Pula Fund Observance of the Santiago Principles

Annual Financial Report. Fiscal Year Ended December 31

Cooperative Investment Plan Act

Community-University Research Alliance Alliance de recherche communauté-université

EXPENDITURE BUDGET

Financement-Québec operational report

HARMONIZATION WITH A ANNOUNCED IN THE FEDERAL BUDGET OF FEBRUARY 27, 2018 AND OTHER MEASURES

QUÉBEC FALL 2014 ECONOMIC AND FINANCIAL UPDATE

Treasury Board of Canada Secretariat

Northwest Territories Housing Corporation

Royal Victoria Hospital Foundation Combined Financial Statements For the year ended March 31, 2017

The Cedars Cancer Foundation at the McGill University Health Center / La Fondation du Cancer des Cèdres au Centre Universitaire de Santé McGill

Royal Victoria Hospital Foundation Combined Financial Statements For the year ended March 31, 2018

VOLUME PUBLIC ACCOUNTS FINANCIAL INFORMATION ON THE CONSOLIDATED REVENUE FUND: GENERAL FUND AND SPECIAL FUNDS. Fiscal year ended March 31, 2017

McGill University Health Centre Foundation Financial Statements For the year ended March 31, 2018

public accounts Fiscal year ended March 31, 2010

May 2007 Budget. discipline and transparency. general tax reduction. investment and employment. Renovation of schools, hospitals and roads

McGill University Health Centre Foundation Financial Statements For the year ended March 31, 2017

Transcription:

Report of the Auditor General of Québec to the National Assembly for 2010-2011 Special report dealing with the watch over the projects to modernize Montréal s University Health Centers Highlights

Cover photo Parliament Building, Daniel Lessard, National Assembly Collection

Over the last few years, we have carried out three watches concerning the projects to modernize Montréal s University Health Centers (UHC) in order to inform parliamentarians of the main risks associated to these projects. We are continuing our work to obtain the assurance that decision-makers will have the necessary information to make informed decisions when they are called upon to make choices that will have repercussions for the next thirty years. Objectives of Our Watch The purpose of our watch concerning the major projects to modernize Montréal s UHC is to obtain the assurance that they are unfolding according to the main conditions of success for the management of major projects and the requirements established by the Ministère de la Santé et des Services sociaux (MSSS) relating to the infrastructures of Québec s social-health network. We paid special attention to the value-added analyses justifying the choice of delivery methods. We wanted to obtain the assurance that the revised analyses for the Centre de recherche du Centre hospitalier de l Université de Montréal (CRCHUM) and the McGill University Heath Care Centre (MUHC) projects had taken our previous recommendations into account. We also examined the actions taken by the stakeholders to obtain the assurance that the projects still meet their objectives in terms of compliance with the scope and budgetary guidelines, and that the governance structure of the projects contributes to their successful accomplishment. Summary of the findings Value-added analysis of the public-private partnerships. We continue to be of the opinion that the value-added analyses of the public-private partnerships (PPP) revised by Infrastructure Québec (IQ) for the MUHC and CRCHUM projects still do not permit to conclude that the PPP delivery method is more economical than having the public sector carry out the projects using the conventional method. Indeed, the new value-added analyses for these projects are based on several of the same assumptions that we had deemed inappropriate or unfounded in the past. In addition, the analysis of the revised value in 2009 of the CRCHUM as well as the information presented to decision-makers leads to the conclusion that the PPP method is the more economical delivery method. This analysis contains two major inaccuracies. First inaccuracy: a major error in the analysis model, which in presenting a $33.8 million variance, results in showing that the PPP delivery method is preferable to the conventional method, whereas in the absence of this error, the conventional method is more economical by at least $10.4 million. Indeed, IQ assumed that the new building constructed according to the conventional method by the public sector would have an asset maintenance and renewal deficit corresponding to a Facility Condition Index of 20 percent beginning in its first year of service. Yet it is impossible for a new building to have a maintenance deficit beginning in its first year of use. In addition, the maintenance deficit level under the conventional method assumed by IQ is not very realistic since it results in a Facility Condition Index of up to 66% after 30 years. In most cases, authorities take action to prevent deficits from exceeding a certain limit. Experts in this field believe that an Index of 15 to 20 percent is already considered very high in real-life situations. Special report dealing with the watch over the projects to modernize Montréal s University Health Centers 3

Second inaccuracy: The information sent to the decision-makers having selected the PPP delivery method indicates that a simulation of the results with a discount rate of 6.5 percent and with no asset maintenance and renewal deficit was carried out. This simulation was never done. In reality, if such a simulation had been carried out, the effect of these two assumptions on the results of the value analysis would have considerably increased the aforementioned $10.4 million advantage offered by the conventional method in comparison with the PPP method. At the MUHC, the proposal of the successful bidder for the Glen Campus project provides for a change in the financing structure (payment of the costs of the parking lot as work progresses) and in the responsibility for the operation of the parking lot (transfer to a third party). However, a new comparison between the PPP delivery method and the conventional method to take this change into account was not done by IQ with a view to confirming the choice of delivery methods. The extension of the call for proposals from January to March 2010 in order to allow bidders to submit revised proposals in accordance with the budgetary guidelines gave rise to the approval of a large number of derogations (18 and 66 for the two bidders for the MUHC, 325 for the only bidder competing for the CRCHUM). The effect of these derogations and changes on the results of the comparison between the conventional method and the PPP delivery method was not evaluated, making it impossible to determine if the PPP delivery method proposals accepted in March 2010 are more advantageous in comparison with the conventional method. Harmonization of project parameters (scope, costs and timeline). Despite the changes to the projects, there has been no follow-up on the clinical plans and the Year 1 operating budgets by the Agence de la santé et des services sociaux de Montréal (ASSSM) since their approval. Consequently, the MSSS does not have the assurance that the initially established objectives will be achieved. Yet the MSSS has indications that suggest that the changes made to the projects will exert upward pressures on the authorized operating budgets. Moreover, the approval of the increase of the affordability criteria for the component under the PPP delivery method of the CRCHUM and the MUHC projects was treated separately, without having a vision of the projects as a whole. If one considers the increase in the affordability criteria, the capital cost estimates now exceed by at least $108.4 million the $5.2 billion announced in March 2004, not counting future estimate revisions for the Centre hospitalier de l Université de Montréal (CHUM) and the Centre hospitalier universitaire Sainte-Justine (CHUSJ) projects, the components of the MUHC not carried out under the PPP delivery method, the financial impact of the withdrawal of the Montréal Neurological Hospital from the Mountain Campus in the CUSM project, and the real content of the chosen proposals. Governance. The complexity of the governance structure still does not promote, in some cases, the accountability of the UHC, the executive director and IQ. Risks are still present in this respect. Conclusion. The signing of the PPP contracts for the CRCHUM and MUHC projects, the duration of which is 30 years, was done or will be done without having a vision of the projects as a whole in terms of their global costs and the operating budgets that will be necessary for these new institutions. 4 Report of the Auditor General of Québec to the National Assembly for 2010-2011

The results of our watch described in this fourth report on the projects to modernize Montréal s UHC and in the three previous ones too often show that the conditions of success for the management of capital asset projects of this scope are not always present and that the management of these projects does not meet the requirements established by the MSSS in its planning of infrastructure investments, notably that the needs match the service proposal and that the identified solutions are supported by rigorous analyses. Recommendations This section presents the recommendations made in our report. It should be noted that, for information purposes, the number of the paragraphs in question is indicated in parentheses. We reiterated the recommendations found in our 2009 report to Infrastructure Québec and to the Secrétariat du Conseil du trésor (34). We recommended to the Secrétariat du Conseil du trésor that it specifies the notion of public-private partnership potential so that projects of a similar nature are subject to comparable analyses (35). We recommended to Infrastructure Québec that it: obtain the assurance that an update of the value-added analyses is made for future projects in order to take into account changes to the projects and their effects on public sector comparators, if any, before recommending the signing of a partnership agreement (57); implement tangible measures to disclose and document potential conflict-of-interest or undue-advantage situations in compliance with the requirements of the calls for proposals (89). We recommended to the Ministère de la Santé et des Services sociaux that it obtain the assurance that: the parameters of the projects are established and harmonized earlier in the process for future projects; the documents used to support decision-making for the continuation of the projects or the progression to the next stage include a section dealing with: adherence to the approved work (clinical plan); the costs of the projects in their entirety, even if they are carried out in several phases and according to different completion methods; compliance to the capital asset and Year 1 operating budgets (73). the governance structure of Montréal s University Health Centers projects is reviewed to ensure that stakeholders better assume their responsibilities. (83) Entitie s Comments The entities had the opportunity to provide comments; they are listed at the end of this chapter. We wish to point out that they accepted all of the recommendations. The French version of the full report is available on our following website at http://www.vgq.qc.ca. Special report dealing with the watch over the projects to modernize Montréal s University Health Centers 5

Significance of the logo An easy-to-recognize building, Parliament, where the National Assembly sits. It is this authority which has entrusted the Auditor General with his mission and to which he reports. Three dynamic lines, illustrating: the three types of audits carried out by his staff, namely financial audits, audits of compliance with statutes, regulations, policies and directives, as well as value-for-money audits; the three elements that are examined during value-for-money work: economy, efficiency and effectiveness; the three fields social, economic and environmental related to the stakes concerning sustainable development. A truly distinctive sign, the logo of the Auditor General clearly illustrates that this institution, which is in constant evolution, aims to assist elected members in their desire to ensure the sound management of public funds, for the benefit of the citizens of Québec.

Auditor General of Québec The Auditor General of Québec reports exclusively to the National Assembly. This Assembly appoints the holder of this office upon a motion made by the Prime Minister and passed by at least two-thirds of the Members of the National Assembly. The term of office of the Auditor General is ten years and is not renewable. The Auditor General Act specifies the powers and duties associated with this office. The Auditor General fosters, through audit, the exercise of parliamentary control over the actions of the government, its departments and its agencies. He conducts financial audits, audits to ensure compliance of operations with acts, regulations, policies and directives, as well as value-for-money audits. The Auditor General carries out his responsibilities with respect to public bodies as well as government enterprises and agencies. He also has jurisdiction to audit the use of funds paid in the form of grants. Except for the obligations stipulated in the Act, the Auditor General determines the work that he performs and decides on the content of his report to the National Assembly. Mr. Renaud Lachance has held the position of Auditor General of Québec since August 9, 2004. He has a Bachelor s degree in Business Administration, a Master s degree in Taxation and a Master s degree in Economics. He is a member of the Ordre des comptables agréés du Québec. From 1985 to 2004, Mr. Lachance served as a professor at HEC Montréal. He also assumed various leadership responsibilities in this university institution specializing in management.

This publication was produced by Québec 750, boulevard Charest Est, bureau 300 Québec (Québec) G1K 9J6 Tél.: 418 691-5900 Téléc.: 418 644-4460 Montréal 770, rue Sherbrooke Ouest, bureau 1910 Montréal (Québec) H3A 1G1 Tél.: 514 873-4184 Téléc.: 514 873-7665 Protection of the intellectual property rights of the Auditor General of Québec. Any person may, without authorization and at no charge, reproduce on any medium excerpts from this document, provided that the source is mentioned, unless it is for commercial purposes. In such a case, prior authorization must be obtained from the Auditor General.