Metro Vancouver has fired the contractor in charge of building the new North Shore Wastewater Treatment Plant, putting the billion-dollar infrastructure project in limbo as the regional government decides how to proceed.
Acciona Wastewater Solutions LP, a Spanish company, was chosen as the builder for the treatment plant in 2017 because it was the low bidder among a group of qualified companies – a standard practice in infrastructure projects.
The plant was originally supposed to be completed by the end of 2020. In 2019, Metro Vancouver and Acciona renegotiated the construction contract because of unexpected problems with soil conditions on the site. The new agreement granted Acciona more money and extended its completion deadline until 2023. The company received another extension during the pandemic.
And then Acciona asked for another budget increase and a further deadline extension.
Metro Vancouver chief administrative officer Jerry Dobrovolny says the regional government decided to terminate the contract after Acciona laid off 200 workers from the site. The company had claimed it was owed $95-million for work on the latest phase of the project.
Mr. Dobrovolny said in an interview the independent certifier that oversees the project on the region’s behalf determined that Acciona had not completed the work.
“We’re not going to be held for ransom,” Mr. Dobrovolny said. “We can’t get bogged down in a stalemate.”
“We can’t keep going to the well. And we’ve lost confidence in Acciona’s ability to deliver, from a schedule perspective and from a cost perspective.”
Metro Vancouver will now search for a new contractor to finish the project. Mr. Dobrovolny said the regional government will receive help during the selection process from an expert panel of people with extensive experience in large infrastructure.
“We’re confident there should not be problems,” he said.
When completed, the North Shore plant will serve 250,000 residents in the districts of West and North Vancouver, the City of North Vancouver and the Squamish and Tsleil‑Waututh Nations. It will replace the existing Lions Gate Wastewater Treatment Plant.
In a statement last week, Acciona said it was still in talks with the regional government. “We are currently negotiating in good faith with Metro Vancouver to try to resolve this situation. Out of respect for that process, we have agreed not to issue any further statements at this time,” the statement said.
Acciona had previously accused Metro Vancouver of derailing the project with countless changes.
“We have successfully completed over 300 major water treatment facilities in 25 countries, and are building or have finished a dozen important infrastructure projects in B.C. and across Canada. This is the first time we have encountered this kind of situation,” the statement added.
The problems with Acciona set off alarm bells throughout British Columbia, because the company is also involved the region’s two biggest transportation projects. It is a 60-per-cent partner in Vancouver’s Broadway subway project with the Italian company Ghella. And it is working in a 50-50 partnership with Calgary-based Aecon on the Pattullo Bridge, between Surrey and New Westminster.
A statement from the province’s Ministry of Transportation and Infrastructure said that Acciona “has not requested extensions or more money due to unexpected or unforeseen delays on the Broadway or Pattullo projects.”
Ending a major infrastructure contract is unusual, and can create more problems than it fixes, said Robert Palter, a senior partner in Toronto with the global consulting firm McKinsey.
The penalties for breaking a contract are high, and lawsuits are a possibility, Mr. Palter said. And it can be extremely difficult to find another company willing to take the original builder’s place, because a partly built project has reduced potential for profit coupled with significant risk.
“It does happen that the contractor gets fired, but it doesn’t happen very often,” Mr. Palter said.
He added that about 50 per cent of large infrastructure projects go over budget and past original deadlines. Often, there are fights over change orders and negotiated settlements over disagreements. Occasionally, the disputes end up in court.
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