Even so, the risks re­main

The Labradorian - - EDITORIAL -

In some ways, it might be re­as­sur­ing. In other ways, it’s rea­son for elec­tri­cal ratepay­ers to be ap­pre­hen­sive. Last 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board and the (Over­sight Com­mit­tee), in par­tic­u­lar, have some­times re­ceived in­for­ma­tion up to two months out of date.”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.

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