June 18, 2012
Contractor signs a cost sharing agreement for Deh Cho Bridge
GNWT DEPARTMENT OF TRANSPORTATION
The prime contractor on the Deh Cho Bridge project has signed a cost-sharing deal with the Government of the Northwest Territories (GNWT) to complete construction, which has been plagued by technical and financial problems.
The Northwest Territories’ Minister of Transportation David Ramsay spoke in the legislature on June 6 to outline the measures that are being undertaken to complete the bridge.
“The department and Ruskin Construction have recently come to an agreement-in-principle that will help us meet this shared goal,” he said.
“The agreement identifies key milestones in the schedule and provides additional resources to meet our timelines. The agreement also sets out how additional costs will be shared by the two parties, with the GNWT’s share capped at just under $10 million.”
The bridge is the largest public infrastructure project ever undertaken in the Northwest Territories.
Ruskin Construction will complete construction of the bridge for $202 million.
When finished, the one kilometre bridge across the Mackenzie River, near Fort Providence, will replace a ferry and ice road.
An important feature of the cost-sharing agreement is that it resolves all outstanding claims between Ruskin and the GNWT, which reduces the future financial uncertainty of the project.
Serious problems with the construction of the Deh Cho Bridge were revealed in March 2011, when former auditor-general Sheila Fraser performed an audit to determine whether the GNWT adequately managed the risk of entering into a public-private partnership (P3).
The territorial government signed a P3 agreement with the Deh Cho Bridge Corporation (DCBC) in September, 2007, to design, construct, finance and operate a cable stay bridge.
Fraser found the agreement was not actually a public-private partnership, which caused the project to suffer from design problems, inadequate quality assurance, cost escalation and long delays.
“We found that when negotiations concluded, the GNWT did not shift any significant risks to the private partner, as anticipated when a P3 procurement was selected,” she said. “During the negotiations, the cost of the bridge increased much beyond the initial estimate. This forced the GNWT to provide more money to sustain the project and to abandon the goal of a self-financing project.”
The initial conceptual design had a projected cost of about $55 million.
However, following consultations it was found that the design didn’t meet navigational requirements on the river.
A longer main span was needed and the bridge became more complex and complicated, as well as more costly to build.
During negotiations, the department and the DCBC had significant disagreements on design matters.
This was compounded by the fact that each side believed it was the owner of the bridge and was responsible for making final decisions.
The P3 Agreement required the GNWT to approve the design at the time of financial close in February 2008.
But, the bridge design had not been fully developed by this time and the government waived the condition.
This decision allowed construction to start on the foundations and substructure in June 2008, before the superstructure design by Spronken was finalized.
In addition, the original designer of the bridge left the project shortly before financial close.
TY Lin International and BPTech Engineering carried out an independent review and found the superstructure design was inadequate.
The GNWT was advised that the design process would have to start over again.
Fraser said the government should never have allowed construction to start without an approved design and these unresolved issues contributed to delays and cost increases.
In the end, three designers were responsible at different times for the project, which resulted in poor design integration.
There was also a need to deal with quality assurance issues identified during the first phase of construction.
The original contract with Atcon Construction was terminated at the end of 2009.
The inability to resolve design issues within the specified time frame resulted in the lenders declaring the DCBC to be in default of a $165 million government-guaranteed loan.
The project was expected to be completed in late 2010.
The Department of Transportation took over the project in March 2010 and Prince George B.C.-based Ruskin Construction replaced Acton Construction.
The revised construction cost of the bridge was estimated to be $182 million and the project was scheduled for completion in November 2011.
Several different parties were involved in the design, redesign, construction and review of the quality assurance standards and processes at different stages.
For this reason, Fraser found it was unclear who will ultimately accept the responsibility and liability of certifying that the design and the construction of the bridge meets the Canadian Highway Bridge Design Code.
Construction on the Deh Cho Bridge, which is scheduled to open in the fall of 2012, is now more than 90 per cent complete. The second phase of construction on the superstructure is underway.
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