The Royal Gazette recently published an article comparing "capital project overruns" by the former United Bermuda Party Government and the current Progressive Labour Party Government, using Budget data for support.

As written, this analysis gives the impression that both Governments have been equally inept in managing capital projects – a conclusion the United Bermuda Party rejects entirely. If the data had been presented correctly, it would have highlighted the UBP's positive record in this regard.

Normally this kind of reporting should be encouraged, because it adds substance and clarity to a story. Unfortunately, in this case, the Budget numbers presented – which compared initial TAF (Total Authorised Funding) numbers with final costs – were misleading and in some cases inaccurate. This suggests a misunderstanding of the capital budgeting and planning process, which makes the article's comparison incorrect. Here's why:

The budgeting process for a capital project (such as a school) begins with an insertion in the Budget of a TAF dollar amount. The initial TAF is a rough estimate for a project in its early conceptual stages. The first appearance of a TAF jumpstarts formal project planning and authorises the spending of funds up to the TAF amount. It rarely represents what the Government believes will be the final cost of a project. Usually, the funds are relatively small, representing costs associated with early planning (the first TAF for the Tynes Bay Incinerator, for example, was only $6 million in 1984, compared to the actual contracted cost of $70.5 million seven years later). Initial TAFs are generally adjusted in subsequent years as the project moves closer to the tendering and construction phases.

The estimated cost of a capital project can change in the period leading up to the tendering process and award of the contract for any number of reasons, including changes in the scope or design, unforeseen events that affect the project's timetable or a change in Government's spending priorities. A good example, again, is the Tynes Bay Incinerator, where environmental and planning objections delayed the project, resulting in significant design changes and increased TAF estimates long before construction began.

That's why it is more accurate to judge the management of a capital project once it has been tendered and the contract has been awarded for a fixed amount. At that stage, the TAF should not change appreciably during the construction process as long as the project is properly managed. That's where the rubber meets the road for any government. In the case of Tynes Bay – where the first TAF appeared in 1984 – the contract was awarded and construction began in late 1991. The TAF listed in the February 1992 Budget Book for $70.5 million was based on the contract. Three and a half years later, in May 1994, construction was completed and the $74.2 million final cost represented a five percent increase over the $70.5 million budgeted TAF.

Even the controversial Westgate Correctional Facility project had tight financial controls. When construction began in February 1991, the $40.5 million TAF was almost immediately in doubt due to the threatened insolvency of the main contractor, Sealand. Despite the UBP Government's decision to inject an additional $2 million into the project rather than start over with a new contractor, the project was completed in June 1994 within the $40.5 million budgeted TAF.

Compare these examples to the Berkeley Senior Secondary School project, where the first $21.6 million TAF appeared in the 1997 Budget under the former UBP Government. In April 2001, the PLP Government awarded ProActive a $68.2 million contract and construction began in June. The 2001 Budget reflects a TAF of $71.2 million. Repeated cost overruns, the termination of the initial contractor in 2004 and related expenses led to successive increases in annual TAF estimates, with the most recent figure in the 2009/10 Budget Book of $130 million, or 83 percent over the 2001 budgeted TAF.

Over the last decade, the United Bermuda Party has been highly critical of the PLP's management of capital projects – which have cost taxpayers more than $100 million in unplanned spending – but we have aimed our criticism primarily at what happened between tendering and the completion of construction. (We have also been critical, with justification, at the lack of transparency during tendering, the lack of tendering altogether on some projects and the repeated selection of contractors against the recommendation of technical officers.) If The Royal Gazette article had presented correct Budget data in a meaningful way, it would have highlighted dramatic differences between the performance of the two Governments as well as the strong record of the UBP in the area of capital-project management.

Grant Gibbons is the Shadow Minister of Education for the Opposition United Bermuda Party and a former Minister of Finance.