In other ways, it’s reason for electrical ratepayers to be apprehensive.
Thursday, Natural Resources Minister Siobhan Coady said she was reassured by a new report from financial consultants EY. The EY report outlined a variety of changes that are improving project management controls over the behind-schedule and over-budget Muskrat Falls project.
But while the changes may be good, the report contains both a critical warning, and unsettling details about problems with the project’s management in the past.
Some of the details are startling, especially when you consider the fiscal pit the project’s fallen into. One such fact? That the board of directors at Nalcor didn’t necessarily have all the facts on time when they met about the project.
The report states, “The Nalcor board and the (Oversight Committee), in particular, have sometimes received information up to two months out of date.”
The report also talks about the need for independent assurance and review of the project, citing the need for: “independent reviews of critical risks and issues to provide a dependable source of information free of biases and filters; independent review of the reasonableness of any significant update to the project cost and schedule forecast; and production of independent reports on a regular basis to communicate the results of the independent assurance activities to the Oversight Committee, the provincial government and the public.”
Much more alarming, though, is the report’s clear warning about the project being at a critical point where costs could spiral still further out of control.
“The project retains a high level of inherent risk for the following reasons: the project is currently in a period with an expected high planned spend rate; the project is approaching a period of intensive activity involving many contractors and interfaces between them; the project is initiating a series of complex and significant activities, e.g., roller compacted concrete North Dam, balance of plant installation, turbine and generator installation, and High Voltage Direct Current commissioning; and the approaching winter season presents a challenging environment for the upcoming period of intensive and complex activity,” the report says, warning that everyone involved with the project has to be on the ball.
“The project, Nalcor and the provincial government should maintain a relentless focus on risk management given the project’s high level of inherent risk.”
One would have hoped that a relentless focus on risk management would have been the order of business from the very beginning.
Foolish, perhaps, to expect that to have been the case.
But then again, we were told repeatedly that everything was under control, that budgets and timelines would be met, that world-class talent was managing a world-class project providing cheap energy that would be the envy of our neighbours.
Turns out, only the words were cheap.