Thank you. With regard to the cost breakdown, you mentioned that the tendered costs for the construction of this facility were over budget by $300,000. Knowing that you needed an additional $300,000, why was that not looked at before the contract went out, realizing that the actual contract came in higher from what you apprised the price at? The point I am trying to make is, are we as a government underestimating the prices of these projects in the Inuvik region? By doing that, we are having to come here again and trying to get our money just to bring up that cost and realistically trying to recognize that there is an increase in costs in development in the Inuvik region, and probably in the Northwest Territories, for that matter.

As a government, is that because the planning or the design and engineering work that is going on within this government is underestimating the reality of what is out there?

Mr. Chairman, in any situation where we are tendering, we do not know what the actual cost of that contract is until we open the envelope. In this case, clearly the tender costs for this project were over budget by $300,000. In that situation, when the estimates were done when the project was designed, those estimates were lower than what the actual cost of the lowest bid was. I think that reflects a change in the economy in Inuvik.

I hope the government, and I expect that Public Works is continually refining its estimates to reflect the actual economic situation we are facing so that anything they are doing right now would reflect the heated up economic environment we currently have. Thank you.

Thank you, Mr. Chairman. There is definitely a problem in the Inuvik region and I think it is more than just underestimating. I think we have to do a thorough review of exactly what is really going on in the Inuvik region and the office in the Inuvik region on these estimates. We cannot continue to see this type of initiative where groups are arguing with people, saying, "This is our price and either you come in at this price or you do not get the contract."

I think that because of that a lot of companies in the Inuvik region that bid on these contracts are really having second thoughts about bidding on government contracts. We realistically have to get our feet on the ground in relation to what is really happening there.

I would like to ask the Minister, do you do reviews with regard to these types of unforeseen increases that are known to the contract community, but as a government, it seems like it has not set in yet? I think we cannot have these types of estimates put out by departments of this government for different projects where we are hundreds of thousands of dollars apart from the actual costs associated with the projects when they are coming in. As a government, are you doing a review to ensure that is not happening?

Mr. Chairman, yes, we will do everything we can to make sure that that is not happening. I believe that Public Works are continually assessing their estimates compared to the actual costs. In fact, that is why they sent out an advisory. If there is a problem in the Inuvik region though, then I am sure that one will be identified and looked at. Thank you.

Is the Minister's department going to basically do anything to look into this to ensure that there is no -- my concern is that we as a government are underestimating our projects in that region. I think we have to know why.

Why is it that the government and the Department of Public Works, with their engineering department, underestimate the amounts we put forth with regard to tender documents or contracts? We realize these people are coming in way over budget.

My concern is we are seeing it in a lot of initiatives. We had the bridge project at Campbell Creek. We are looking at $900,000 that has moved from one project to another. Now with regard to this project, we are seeing another $800,000. Those are large spreads with regard to unforeseen expenditures. We should maybe ask the Auditor General to do a review on why that is.

Thank you, Mr. Chairman. Maybe I will ask the Minister of Public Works to comment on this, since it is his department. Thank you.

Thank you, Mr. Chairman. Mr. Chairman, there are two important points that have to be taken into consideration with regard to this project. The original pricing of this project was for Hay River. The plan was initially that this building was to be built in Hay River. That played a large part in what it would cost to build it in Hay River versus Inuvik.

The other thing to take into consideration was that the time that the project was put into the budget was two or three years previous to when it actually happened in Inuvik. Inuvik is now experiencing a large boom, so to speak, as a result of oil and gas activities. All three departments, Public Works, Transportation and Housing, are experiencing increases of up to ten to 15 percent increases in our projects in the Inuvik area. We put out this notice to departments so that they can expect this in the future on when to undertake capital projects.

Thank you, Mr. Chairman. With regard to the comments from the Minister of Public Works, using the argument that this building was designed for Hay River and that was the price that was set at, anybody with an idea of the North would realize that Hay River does not have permafrost, for one thing. Inuvik does. Those costs have to be associated with any projects developed in the region.

If anything, you would have thought the department would have caught that before they even put it out to a public tender, knowing that there was that cost associated with it.

Using the argument that this was supposed to be built somewhere else and it ended up in a different place, those are things that you look at with regard to the geographical differences between certain areas in the Northwest Territories, from the south end to the north end, looking a the logistic costs associated with getting goods and services to those different sites, to and from southern Canada and what is the market like in any particular area.

It looks to me like this has been a poor planning job by this government with regard to what has happened. With the arguments raised by the Minister of Public Works, it sounds to me like someone either was not doing their homework or we just totally left out the crucial aspects of doing work in the Inuvik region compared to Hay River.

Has the Minister looked at that with regard to why that argument was used, that because it was designed for a particular place, that now those costs are associated with the redesign? That should have been done before it got to a public tendering process. Why was it not done?

Thank you, Mr. Chairman. Public Works is a service department. We operate with what funding is given to us by the departments that are sponsoring the project, in this case, Justice. Justice had only so much money in their budget for this particular building. That is what was given to Public Works to operate on. I believe what Mr. Handley described as the breakdown of $800,000 shows in there that was a cost involved in having to take into consideration a different type of design for the building and the base of the building. So those were all reflected in those costs there.

Mr. Chairman, I think that we can look into, as the Member has asked, how these projects were estimated. We can see whether this is an anomaly or whether this is a trend. We want to have estimates as accurate as possible as well. So we will follow up on the Member's suggestion. Thank you.

Thank you, Mr. Chairman. To set the record straight, the Minister of Public Works stated that the reason for this cost increase was because the building was first designed for Hay River.

In fact, I recall in the 13th Assembly when this issue came up, there was no design at that time for a separate facility so that is not a correct response. The design has only been developed when they split the young offenders and female and male offenders facilities. That is why you have the male one here in Yellowknife and a separate one up in Inuvik.

At that point, there were no plans. There was nothing on the books. An issue came about as a result of the fire marshal's recommendations to the Legislative Assembly. For the record, we have to straighten that out. It is not the fact that the building was designed for a specific location. The design occurred after a decision was made to proceed with the project. Thank you.