Layers to Muskrat Falls cost oversight

Ashley
Ashley Fitzpatrick
Send to a friend

Send this article to a friend.

Nalcor Energy issues contract for inspection services

Muskrat Falls artist's rendering

At Nalcor Energy’s annual general meeting earlier this month, president and CEO Ed Martin said construction on the Lower Churchill hydro project is on time and on budget.

Keeping it that way is the challenge.

Conducting quality assurance and monitoring costs on a multi-billion-dollar project is no simple task. For the Lower Churchill development, Nalcor is not tackling that task on its own.

The Crown corporation has a team working side by side with engineering, procurement and construction management contractor SNC-Lavalin, Nalcor vice-president and project lead Gilbert Bennett said in a recent interview.

Now, Nalcor also has sub-contractors chronicling the progress of major project elements in development worldwide and pushing to identify, early on, problems that might hike overall project costs.

A contract for “the provision of third-party quality surveillance and inspection services” for the Muskrat Falls dam and surrounding construction was awarded to four companies March 18: GL Noble Denton Canada Ltd., out of its St. John’s office; Moody International Ltd. out of Calgary; SGS Canada out of Montreal; and Killick Group of Mount Pearl.

“This work here is really quality assurance. This is sort of nuts and bolts, part of our process to validate that we’re getting what we need from our suppliers,” Bennett said.

Four companies are being tapped, he said, because they have expertise in different areas key to the project’s success. The companies will be involved in inspections and non-destructive testing at the manufacturing sites.

They have international experience on major projects. GL Noble Denton Canada, for example, operates out of offices in St. John’s, Dartmouth and Calgary with a focus on the oil and gas industry, but its parent has provided quality assurance on projects in Australia, Oman, Mexico and Norway.

The Killick Group has more than 40 years of experience and has worked on local projects such as the Voisey’s Bay mine development and offshore oil works at White Rose. It has also worked on major projects in New Zealand and Cuba.

Cost is a main concern, since a poorly manufactured product will be rejected and replacements or upgrades would have to be completed. The result is likely a delayed project timeline, or early breakdowns. Ultimately, it would be more money from Nalcor’s end and higher costs for the province.

It is the same reason, Bennett said, Nalcor staff regularly meet with the manufacturers for the largest pieces of the project, including the turbine generators for the powerhouse at Muskrat Falls. Andritz Hydro was awarded the contract for turbines and generators in January.

“So (Nalcor staff) provide a level of oversight. We have quality people who look at the processes, we look at how contractors are addressing quality through audits and we have (purchased) services as well. If you think about where we’re going, safety, environmental performance, quality are key issues for us,” Bennett said. “We don’t want to have surprises in the field.”

Smaller-scope contracts falling within the Lower Churchill project also require their own quality plans, he said. They detail how contractors will track their progress and complete their work within an indicated timeframe.

Sometimes surprises come along regardless of the oversight put in place. Nalcor’s lead has said the corporation’s efforts amount to due diligence.

While massive amounts of information are flowing to the Crown corporation on project pieces, not all of that information is open to the public. In an effort to keep the public in the loop, Nalcor is providing monthly summaries of contracts and spending on the project website.

Outside Nalcor and the provincial government, the federal government’s independent engineer — a position established under the federal loan guarantee agreement — is also tasked with project oversight. A representative for the federal Department of Natural Resources confirmed the independent review work has begun.

 

afitzpatrick@thetelegram.com

Organizations: Killick Group, Moody International, Department of Natural

Geographic location: Calgary, Montreal, Canada Dartmouth Australia Oman Mexico Norway White Rose New Zealand

  • 1
  • 2
  • 3
  • 4
  • 5

Thanks for voting!

Top of page

Comments

Comments

Recent comments

  • gerrymartin
    June 21, 2013 - 21:11

    Kathy Dunderdale, Ed Martin, Danny Williams and Tim Powers will be rewarded for getting this project through, regardless of the cost. But when all of our families get whacked with a $200+ per month increase on our electrical bills it will be Cathy Bennett that takes the hit as my family will cut the Happy Meals first. Then we won't buy a house in Danny Lands. then won't buy a thing from the companies that puts Dunderdale and Martin on their boards.

  • Tony Rockel
    June 14, 2013 - 22:39

    No matter how well they control the cost, it's still a complete waste of money and way beyond anything a province this small can afford. And just wait until they get bogged down in the North spur stabilization quagmire-- cost containment will go right out the window.

  • Eli
    June 14, 2013 - 17:53

    March 2013? Nothing was passed then. SNC-Lavlalin? Who's minding the shop there with so many CEO's being investigated.We should be demanding answere to the same question here.

  • Casey
    June 14, 2013 - 17:11

    Get this thing started and stop listening to the whiners. They will always have something to complain about.

  • Puppetwatcher
    June 14, 2013 - 15:43

    Question: Where does the Board of Directors fit into this oversight schema? Really, what role does it play other than to sign on the dotted line when directed by government (and Dunderdale can throw as many kitchen tantrums as she wishes to justify qualifications). Really, what can the Chair of this Board offer to this oversight process? Selling a case of beer is hardly comparable to influencing major decisions such as "the multi-billion dollar Muskrat Falls hydro-generation plan" (Powers, Rotman School of Management, Toronto). So while it all sounds very comprehensive, it seems as though there are still some flaws to be addressed. You can't put on a shirt and tie, take the hand of your MHA, and pretend you know about the energy industry. Of course, unless you're a Dunderdale puppet. Then you can.

  • Puppetwatcher
    June 14, 2013 - 15:34

    Question: Where does the Board of Directors fit into this oversight schema? Really, what role does it play other than to sign on the dotted line when directed by government (and Dunderdale can throw as many kitchen tantrums as she wishes to justify qualifications). Really, what can the Chair of this Board offer to this oversight process? Selling a case of beer is hardly comparable to influencing major decisions such as "the multi-billion dollar Muskrat Falls hydro-generation plan" (Powers, Rotman School of Management, Toronto). So while it all sounds very comprehensive, it seems as though there are still some flaws to be addressed. You can't put on a shirt and tie, take the hand of your MHA, and pretend you know about the energy industry. Of course, unless you're a Dunderdale puppet. Then you can.

    • JM
      June 14, 2013 - 19:06

      I am not sure this article is correct. The Muskrat Falls website is providing a monthly report on benefits, and procurement. However, there is no information on there about the budget. Nalcor should be providing the full monthly cost report on the Muskrat Falls project to the House of Assembly. This would include the incurred cost, the committed cost, and the forecasted cost to complete. There will be immense cost pressures on this project, just like every other project in Newfoundland at present. I for one would like to see the revised forecasts. As an aside, the monthly report referenced in this article has not been updated on the Nalcor website since March of this year.

    • concerned
      June 14, 2013 - 19:11

      When will the independent engineer report if Nalcor are following best utility practice? They should put their own engineering stamp on the North Spur Design, or maybe the HVDC tower design? Remember this IE assessment is a critical component of the Loan Garuntee. I would like to see the report(s) tabled by the IE released to the public. As this is a oversight role, funded by the taxpayer, but ultimately included in the final rate to the island consumer this does not seem unreasonable. Maybe the PUB should request that these reports be tabled to the PUB, and reviewed in a technical forum? The residents of MUD Lake deserve to see the assessments of the North Spur stability, and hold the Independent Engineer accountable.

  • puppetwatcher
    June 14, 2013 - 15:21

    Question: Where does the Board of Directors fit into this oversight schema? Really, what role does it play other than to sign on the dotted line when directed by government (and Dunderdale can throw as many kitchen tantrums as she wishes to justify qualifications). Really, what can the Chair of this Board offer to this oversight process? Selling a case of beer is hardly comparable to influencing major decisions such as "the multi-billion dollar Muskrat Falls hydro-generation plan" (Powers, Rotman School of Management, Toronto). So while it all sounds very comprehensive, it seems as though there are still some flaws to be addressed. You can't put on a shirt and tie, take the hand of your MHA, and pretend you know about the energy industry. Of course, unless you're a Dunderdale puppet. Then you can.