Thoughts and Opinions On Today's Important Issues

Tuesday, May 11, 2010

P3 Bridge Fails---Government Forced To Take Over The Project

Oh yes, P3 projects are riskless for Michigan. Nothing can go wrong, go wrong, go wrong...

Just ask the Legislature in Northern Canada about their bridge project as it failed half-way through. Never mind the Port Mann failed P3 bridge project. It at least had not yet begun when Macquarie advised it could not raise the money required.

Let's see: behind schedule, overbudget, design flaws, receivership of contractor, borrowing limits being reached, onerous penalties, taking money from other essential risks here. A huge boondoggle originally budgetted at $50M, about 1/4 the final cost.
  • Deh Cho Bridge over budget
    The Hub, Northwest Territories

    Already one year behind schedule, the Government of the Northwest Territories announced Friday that the Deh Cho Bridge is now officially over budget.

    Government officials stated that the bridge, which will span the Mackenzie River near Fort Providence and replace both the Merv Hardie ferry and Mackenzie River ice crossing when completed, is now projected to cost $182 million – $15 million more than the original estimate.

    When a delay in the bridge’s opening was announced last year, government officials said they were confident changes in the bridge’s final design would provide enough savings to keep the project on budget, even with the delay. Those savings never materialized, Transportation Minister Michael McLeod told the legislative assembly on Friday. The extra cost will have to be covered by the GNWT for now, McLeod explained.

    “Right now we expect the $15 million is going to cover all the claims,” he said Friday. “It’s going to cover all the changes that we’ve had to make.”

    Hay River South MLA Jane Groenewegen said she had questioned the need for the bridge in the first place, even when it was budgeted as a $50 million, self-sufficient project during the 14th Assembly. With the project half-complete, Groenewegen said the project is “way past the point of no return.”

    Somebody wanted to leave this Territory a legacy,” she said. “We have been left a legacy all right. I don’t think we have even begun to see the end of it yet. We’ve been sold a bill of goods so many times already on this project that don’t worry, trust us, this is the limit of our involvement, just isn’t believable anymore.”

    Groenewegen said the GNWT now has three options: approve the $15 million appropriation, take the bridge debt onto the government books and operate the project as a government project, or mothball the project entirely. The second option would either push the GNWT over its debt limit or bankrupt it, Groenewegen said, while the third is simply not economically feasible.

    “The problem with that idea is that apparently the pillars would have to be removed,” she said. “That would cost more than it cost to put them there in the first place. Terminating the lending agreement that we are backstopping would also cost about $50 million in interest and penalties. That idea of stopping the bridge at this juncture is probably a non-starter.”

    Other regular MLAs also voiced their frustration with the news. Weledeh MLA Bob Bromley worried that the added cost would negative impact other government projects and “core social needs,” including daycare, early childhood education, and protecting the environment.

    “If we were a family, we would be getting close to living in the streets,” he said. “Our credit cards are maxed out. We poured our money into building a new garage when the house is falling down.”

    Kam Lake MLA David Ramsay said he has been extremely concerned with the project for a number of years.

    “The alarm bells were going off on this project and so-called partnership many years ago. The sad thing is not everybody was listening,” he said.

    “My guess is this project will cost close to $200 million by the time all is said and done and this is a complete and utter disaster of a project. The darkest days may yet be upon us and we continue to look at this project in this complete and utter boondoggle that the Deh Cho Bridge has become.”

    Finance Minister Michael Miltenberger said the $15 million in added costs could be recovered “through the tolls and all the other arrangements that have been signed as part of this deal.”

    “But going forward, because of this debt and other debt that we’ve agreed to accummulate as part of the current economic downturn, we are going to be going down in our borrowing limit,” he said. “In 2011-12, available borrowing capacity will shrink to about $85 million.”

    McLeod also announced Friday that the Deh Cho Bridge Corporation’s project managers, Andrew Gamble and Jivkov Engineering, have been replaced.

    “As a result of a number of discussions for the Deh Cho Bridge Corporation, we felt that we needed to bring in a new team to provide project management on this job,” he said. “We have since agreed and notified the people that were on the project management team that we will be bringing in a new company and new players to fill those roles. That has been accepted.”