Published here May 2010

Note: The Issues for Discussion in this case study may require research on the Internet.

Project #1: Calgary's Saddledome Project
Project #2: Walter C. Mackenzie Health Sciences Centre Project 
Project #3: Kananaskis Country Recreation Development

Project #2: Walter C. Mackenzie Health Sciences Centre Project

Walter C. Mackenzie Health Sciences Centre
Walter C. Mackenzie Health Sciences Centre

News Report: "Management breakdown" quadruples Alberta projects' cost
(Published in The Globe and Mail newspaper, December 18, 1981, by columnist Barry Nelson)

CALGARY - The Alberta Government will spend at least $364 million more than it planned out of the Alberta Heritage Savings Trust Fund for the Walter C. Mackenzie Health Sciences Centre. The hospital and research centre in Edmonton, budgeted at $135.6 million, will instead cost more than $500 million A significant portion of the increase is due to "management breakdown" and "loss of cost control".

The exact cost of the Walter C. MacKenzie health sciences centre, planned for completion in 1986, is "an unknown, but I would expect it would be in excess of $500 million at today's rates," Hospitals Minister David Russell recently told a Legislature committee, under sharp questioning from NDP Leader Grant Notley and Thomas Sindlinger, the Calgary MLA who was expelled from the Conservative caucus for disagreeing with the Government about constitutional policy and the use of the $9 billion Heritage Fund.

Asked why the Legislature was being asked for extra money for the health sciences centre, the minister at first said repeatedly it was needed for "ongoing construction and equipment." But after intense grilling he finally acknowledged: "It doesn't give me a great deal of pleasure to stand in this Legislature and use terms like loss of cost control or management breakdown, but that's what happened." He blamed "the owners" (members of the hospital board) for the situation. Members of the board spoke to him after they "unearthed and identified some breakdowns in control of the various components and roles of people in key positions with respect to the project ... .

"The architect was working on a time-plus-cost basis. The owners were letting the architects take instructions from any number of bodies. They should have had only one spokesman, but you had all kinds of user groups going and looking at sketch plans and saying to the architects: 'We don't want it this way. Try it bigger this way. Try moving this here.'"

The architects' fee for Phase 1 of the centre "was way more than it should have been, not because they were doing anything dishonest, but simply because everybody and their cousin was giving them instructions, which they were following." In addition, "there didn't seem to be any one person watching ...  cost control ... One example ... was that the project director was not reporting the cost of approved extras he had been approving. He somehow seemed to be under the impression that they were outside the normal contract amounts and would be dealt with later ... For the life of me I can't figure out why a person would take that attitude, but he did."

The project manager has since resigned, but has been appointed as a consultant to the project.

Mr. Russell said he has agreed to allow Phase 1 to be completed, but has asked the hospital board to "draw back their aspirations a bit and see if Phase 2 could proceed by way of renovations to existing buildings or to proceed with new construction."

Mr. Notley said in an interview yesterday that blaming the hospital board for the cost increase does not absolve the Government because the project was also being monitored by an implementation committee that includes a deputy minister of Mr. Russell's department.

Update March, 2006

The Walter C. Mackenzie Health Sciences Centre was named after Walter C. Mackenzie - a prominent surgeon, researcher, educator, and health care administrator. The Centre integrates patient care, health education, and research. The Centre was built in two phases that were completed in 1983 and 1986. The cost of the second phase has been reported as $42.8 million. Two of the most visible features of the centre's interior are the glass-domed courtyards and lamp-lit walkways. Abundant greenery gives the Mackenzie Centre a resort-like atmosphere that is both relaxing and therapeutic.

Located on the first floor are the McMullen Art Gallery and the Health Sciences Bookstore. In addition to the Faculty of Medicine General Office located on the second floor, the Walter C. Mackenzie Centre houses the Departments of Laboratory Medicine & Pathology and Radiology and Diagnostic Imaging; the Divisions of Continuing Medical Education and Health Sciences Media Services and Development; and two key educational resources: a health sciences library and a 400 seat auditorium.

Issues for discussion

  1. What might motivate the project director to not report the cost of approved extras?
  2. Why was scope and control not effective?
  3. In the end, do you think the public appear to have got value for money?
Project #1: Calgary's Saddledome Project  Project #1: Calgary's Saddledome Project

Home | Issacons | PM Glossary | Papers & Books | Max's Musings
Guest Articles | Contact Info | Search My Site | Site Map | Top of Page