ST. JOHN'S, N.L. — The Muskrat Falls Inquiry is now hearing more evidence from the later stages of the hydro project’s construction, but the project is still ongoing and there are commercial negotiations and legal disputes still tied to contracts, leaving Commissioner Richard LeBlanc wrestling regularly with what to demand, and how much to disclose.
The issue came up again on Thursday, with witnesses from the Barnard Pennecon partnership on the stand. The company was tasked with the North and South Dams contract package, where all costs have yet to be settled between the contractor and Nalcor Energy.
A document in evidence noted $62 million in executed change orders — overruns. But there’s more still being sorted. An estimate on total overruns was requested.
“I think this would be a very relevant question in this inquiry,” said lawyer Erin Best, representing former premier Kathy Dunderdale, asking for a current amount, with some indication of what might yet be coming.
LeBlanc heard comments from other lawyers, including Richard Gosse for Barnard. He noted he’s spoken previously on the subject of commercial sensitivity, but agreed the information is relevant.
“(But) most importantly I don’t want to see the people of this province incur any more costs than are needed to get this project done,” LeBlanc said, before ordering Barnard Pennecon to file the information in a confidential exhibit for his review only.
There were a few more questions for the witnesses: Derek Tisdel, vice-president and operations manager for Barnard Construction, and Aaron Rietveld, who worked as a project manager.
While they were on the stand, questions were posed about perceived risks going into the contract work, including in terms of labour.
“We were very concerned about the availability of skilled labour at the Muskrat Falls site in particular because of the amount of other general contractors that were sharing that same site, we’d be in competition with them for the same labour pool. The same labourers, operators carpenters. In addition, there was quite a bit of work going on across Canada where, again, the same labour pool was going to be potentially pulled to other places. So our concern was the availability of skilled trades labour,” Tisdale said at one point.
The Inquiry has already heard from SNC-Lavalin’s lead estimator about the labour pinch of having the Hebron offshore oil project ongoing in the province, and how that was factored into the Muskrat Falls project’s original cost estimate.
Barnard Pennecon wanted Nalcor Energy to take on at least a portion of that labour risk over and above a certain threshold. The shared risk was agreed to by Nalcor Energy.
It took about 10 months for the construction partnership to get from first bid proposal to a contract signing.
“I would say that’s a little unusually long,” Tisdale said, when asked if the period was standard or “unusually long.”
As for the reason it took so long?
“There were things that were changing in the 10 months that we continued to provide a revised pricing on,” Tisdale said, making a specific reference to changing schedules.
Rietveld spoke about some of the experience of the contractor as it became part of the day-to-day mix. He said there was back and forth between the company and Nalcor project team, and by 2016 “a fair number of letters.” It was a more difficult start than finish to the work, he said.
“We didn’t feel like we had maybe the attention of some of the most senior leadership at Nalcor that first year, so consequently some frustrations arose. In early 2017 we began executive-level steering committee meetings between Barnard Pennecon and Nalcor,” Rietveld said, describing meetings every month or two for a while, before there was work to improve the relationship, work with a third party and a “reset” on communication in 2017.
“But then moving forward in really 2017, 2018, all the way out until now, I think the relationship’s been fine, it’s been good. The communication improved. So I think that was kind of the turning point, early 2017, for us,” he said.
The inquiry’s daily hearings continue Friday with a representative from Andritz Hydro, before an extended break until May 2.
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The Muskrat Falls Inquiry (Phase II)
