After hearing from two former premiers about early Muskrat Falls project oversight by the provincial government, the public inquiry changed gears — on Wednesday, contractors were called in.
Inquiry co-counsel Barry Learmonth started the day exploring the cost overruns that reach beyond the time of Kathy Dunderdale and Tom Marshall.
Project manager Kelly Williams, with Valard Construction, and BJ Ducey, a senior vice-president with Quanta Services (Valard’s parent company), were called to testify. The pair was asked about cost increases on the roughly 1,100-kilometre Labrador-Island Link transmission line from Muskrat Falls to Soldier’s Pond.
According to auditors Grant Thornton, the approximately $690-million estimate at sanction in 2012 specifically for the Labrador-Island Link transmission line’s construction (excluding right of way work) reached an overrun of $364 million at the time of the auditor’s review.
There was an additional, separate, $285-million overrun on right-of-way clearing work.
“The $649 million (total) overrun is attributable to a combination of factors, including contracts awarded in excess of budget, settlement agreement, and change orders due to items such as geotechnical conditions different from planned and the conductor proud strand issue (net of insurance proceeds) and unallocated budget amounts,” the Grant Thornton report stated.
On the stand, two of the men who were leading the construction supported that finding. They highlighted troubleshooting tied to limited geotechnical work. They spoke about waiting for updated engineering and approvals out of St. John’s for individual transmission towers and the regular disputes arising between the contractor and the owner’s team over foundations and the right way to proceed.
They described difficulties with site access, particularly on the island of Newfoundland.
They said the condition of access roads at times also slowed them down.
“The accesses were not holding up to the construction traffic,” Williams said at one point.
He said roads at times degraded to a point where it was difficult to move people and equipment to and from a work area.
By 2016, as disputes piled up and bills went unpaid, the executive communication was increasingly difficult. But in early summer 2017 a settlement was reached, with Nalcor Energy agreeing to pay Valard $245 million (forming part of the previously mentioned $649-million overrun).
Ducey described it as a “win-win,” avoiding a drawn-out legal dispute.
Ducey said — at all points — whatever disputes were ongoing between Nalcor project managers and the contractor, skilled trades workers produced.
“The men and women that worked on this project, in the field, did an excellent job through very strenuous circumstances at times, and I think achieved world-class productivity when given the chance to be successful here,” he said, giving a nod to the IBEW.
He was asked, “You were very happy with their performance?”
“Yes,” he responded. “Absolutely.”
“The men and women that worked on this project, in the field, did an excellent job through very strenuous circumstances at times." — BJ Ducey
There was discussion of the “proud stranding” issue — the discovery of a strand on the power line having popped up from the tight coil of the conductor.
“It was noticed in multiple area. And there was a period of suspension where new stringing didn’t carry on,” Williams said.
There was a roughly four-month delay in getting the line up. A $58-million estimated cost arose, with about $25 million recovered through insurance, plus ongoing litigation between supplier General Cable Canada and Nalcor Energy.
‘Lack of team’
In the afternoon, former Nalcor Energy contractor Mark Turpin was called to the stand, with questions led off by commission associate counsel Adrienne Ding.
Turpin walked through his work as an estimate co-ordinator, then construction manager on bulk excavation, then area manager for construction of the north and south dams, and finally area manager on the North Spur and stabilization works, before he was both ushered out and jumped into new opportunities.
Before leaving the project, a frustrated Turpin wrote directly to then-Nalcor CEO Stan Marshall, talking about a lack of decision-making power at the Muskrat Falls site, versus in St. John’s.
“The lack of team approach and failing to listen to opinions and suggestions from other more experienced professionals will continue to plague the project,” Turpin warned.
Having worked on the contract call and with bidders, he also questioned the award of the north and south dams contract package to a joint venture of Barnard Pennecon.
“I was very surprised by that announcement,” Turpin told the inquiry, while also later acknowledging he left before the end of contract negotiations for that package of work.
For the Concerned Citizens Coalition, lawyer Will Hiscock asked about Marshall’s response. Turpin said he was invited to Hydro Place, and Marshall was in “full listening mode.”
Hiscock also asked Turpin about the North Spur.
“I have confidence in the design engineer. I have confidence that the North Spur is built exactly as the design drawings and the specifications show,” Turpin said.