Muskrat Falls Project

Assessment

Hughes, L. (2022). Muskrat Falls Generating Facility. CBC. photograph. Retrieved September 17, 2022, from
https://www.cbc.ca/news/canada/newfoundland-labrador/opinion-larry-hughes-muskrat-falls-1.6553974

Justin Dahlman
BCPM
School of Construction
SAIT
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Muskrat Falls Project Assessment

Prepared for
Lahiru P. Silva, CPMT-2010, Instructor

Prepared by
Justin Dahlman 000865872

BCPM Student
School of Construction
SAIT (Southern Alberta Institute of Technology)

September 17th, 2022

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 EXECUTIVE SUMMARY

The Muskrat Falls Project was plagued by many poor decisions when it
came to Nalcor’s planning and scheduling.

Nalcor made many mistakes including a lack of geotechnical tests for the
1100-kilometre electrical lines which led to over $600 million in overrun;
Contracting an Italian company to work in a foreign environment which they are
not familiar with, which led to a $1 billion loss; and not collaborating with other
contractors when it came to making schedules and planning steps in the project
which led to poor relations and confusion. These factors, which are all a product
of Nalcor’s incompetence, poor scheduling, and poor planning; are the reason
that a project originally budgeted at $6.2 Billion jumped to over $13 billion.

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 TABLE OF CONTENTS
EXECUTIVE SUMMARY................................................................................................................................0
ASTALDI.......................................................................................................................................................2
INTRODUCTION TO THE PROJECT...........................................................................................................2
POOR PLANNING.....................................................................................................................................2
CLOSING..................................................................................................................................................3
CONTRACTOR RELATIONS & POOR PLANNING..........................................................................................4
SNC-LAVALIN CONTROVERSY.................................................................................................................4
TRANSMISSION LINES & VALARD...........................................................................................................5
CLOSING..................................................................................................................................................6
CONCLUSION...............................................................................................................................................7
REFERENCES................................................................................................................................................8

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 ASTALDI

An Italian company contracted by Nalcor to construct the Powerhouse and

other sectors made of concrete for the Muskrat Falls Project.

INTRODUCTION TO THE PROJECT

In late 2013, the chosen bidder, a company by the name of Astaldi, was
given a $1.1 billion deal to erect the powerhouse and accompanying concrete
buildings at Muskrat Falls. Astaldi had submitted the cheapest bid for "the largest
work package on the project," (Roberts, 2019) which was a large factor in them
being chosen. 

POOR PLANNING

Astaldi was a company which had no familiarity with an isolated, cold

setting, and wanted to keep up with their task all year long without fully knowing
the effect it would have on the overall project.

As stated by Astaldi Project Manager Don Delarosbil "if you start in

November instead of June, you're not just losing four months, you're probably
losing ten months. You almost lost a year of construction.” (Sullivan, 2019)
Delarosbil’s attitude towards saving time may have been a precursor for the
failure to come. This mindset was emphasized by Astaldi making plans to
construct a heated dome around the site for the powerhouse to keep pace with
their plan to pour concrete year-round. However, only halfway through the
fabrication of this heated dome, Astaldi decided to scrap their plans and demolish
the structure, thus setting off a chain reaction throughout the project. This
incredible act of incompetence by the Astaldi leadership further delayed many
parts of the project by over a year and led to their dismissal and replacement by
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Pennecon. Furthermore, according to some estimates, this poorly planned idea
cost the project upwards of one billion taxpayer dollars. 

 The lack of ability of the Astaldi team was not unforeseen. In an audit by 
 Grant Thornton, it was warned that Astaldi may have some potential issues with
the execution of the project. Nevertheless, despite multiple warning signs, the
Nalcor team continued with Astaldi. This illustrates that Nalcor’s main focus was
collecting as much money as possible instead of producing the best product.

CLOSING

In due course, the poor planning and foresight of the Astaldi team in an
unfamiliar environment, alongside the questionable decisions by Nalcor’s
choosing of the company ultimately led to a very large fiscal loss and an even
larger loss in the reputation of both companies.

If Astaldi would have planned their approach to the project better or told
Nalcor that they would not be able to finish pouring concrete in the scheduled
timeframe, they would not have made the mistake of the heated dome, which
ultimately would have saved the project money.

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 CONTRACTOR RELATIONS & POOR PLANNING

Nalcor Energy is a crown corporation out of Newfoundland and Labrador,

they are the main company overseeing the Muskrat Falls Project. Their poor
relations and lack of proper planning is what is thought to be the main downfall of
the project.

SNC-LAVALIN CONTROVERSY

SNC-Lavalin, a prominent engineering, and construction management

company in Quebec, was contracted by Nalcor in 2011 to manage the project. But
the partnership soon deteriorated, and Nalcor eventually relieved SNC from its
leadership and established joint-management units. SNC witnesses of the project
said that Nalcor controlled and manipulated the project and treated SNC
employees very poorly, while Nalcor sources reported that SNC had been
performing inadequately.

SNC appointed Norman Bechard as the project director. He is an

experienced manager who has a long list of past projects that he has worked on.
Bechard claimed that with how Nalcor was managing the project, that he felt
useless, he noted that even experts with the utmost experience were replaced by
individuals who may have had the proper qualifications but lacked the experience
for such a large-scale project.

Bechard harshly criticized Nalcor's dedication to risk management among

other things, which included their lack of clarity and poor communication.

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 TRANSMISSION LINES & VALARD

Nalcor hired Valard in 2014 for upwards of $800 million to lay the
foundations, construct the towers, and run the cable for the transmission lines
that would be transmitting electricity from the project when operational. It was
shown that the geotechnical conditions on which the towers would be built, from
Muskrat Falls to over 1100 kilometres away were not physically studied. "The so-
called desktop study" (Roberts, 2019) used information from aerial imagery
among other sources, with little physical testing, such as drilling test holes at
tower locations. Consequently, Valard soon realized they needed more complex,
and thus more expensive, tower foundations. This act of ignorance by Nalcor is
one of the countless factors that contributed to the transmission line project's
budget overrun exceeding $600 million as of March 2018, with the line not even
fully complete.

The conditions of the Valard deal rapidly created a highly difficult dynamic
between both Valard and Nalcor. Valard began imposing a unit fee for each tower
rather than receiving payment in one lump sum due to the poor quality of
estimation done previously, and thus the price was based primarily on the style of
foundation which was needed.

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 CLOSING

As Expressed, Nalcor’s poor planning and cooperation with contractors cost

the project millions in overrun. This was shown by their lack of professionalism
with the Valard team and the transmission lines, along with their lack of research
and preparation in the area where the lines would be erected. Additionally, the
SNC-Lavalin controversy showed how unprofessional Nalcor was, and how little
they were able to plan and schedule the project with accompanying contractors.

To finish, Nalcor truly dropped the ball with the project, and should have
planned their actions more carefully, because if they would have properly
planned out their approach for the lines and allowed other contractors to help
with scheduling, the project would have lost far less money.

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 CONCLUSION

A very significant financial and time loss and an even greater loss in both
firms' reputations were ultimately caused by the Astaldi's poor planning and
foresight, together with Nalcor's hurried project timeline. Due to Nalcor's subpar
planning and lack of communication with the contractors, the project ran
billions over budget. The obvious cheap out on Astaldi, the SNC-Lavalin
controversy, and the transmission lines all revealed Nalcor's lack of readiness,
planning ability, and mentality towards the importance of a good schedule. The
SNC-Lavalin controversy also demonstrated Nalcor's lack of professionalism and
how poorly they were able to organize and schedule the project with assisting
contractors.

To sum up, Nalcor really botched the project and should have planned their
actions more carefully. The project would have gone much more smoothly, and
they wouldn't have had to double their initial estimate if they had taken the time
to find better contractors for the job and heeded their criticism and advice. This
project is the ideal illustration of why effective planning and scheduling are
essential because without them, you will lose a significant amount of money,
time, and image.

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 REFERENCES
Hughes, L. (2022). Muskrat Falls Generating Facility. CBC. photograph. Retrieved September 17, 2022, from
https://www.cbc.ca/news/canada/newfoundland-labrador/opinion-larry-hughes-muskrat-falls-1.6553974

Roberts, T. (2019, April 19). Analysis | muskrat falls: A story of unchecked oilmen and their
boondoggle hydro project | CBC news. CBCnews. Retrieved October 19, 2022, from
https://www.cbc.ca/news/canada/newfoundland-labrador/muskrat-boondoggle-reasons-
1.5088786

Commission of inquiry respecting the muskrat falls project. Commission of Inquiry Respecting
the Muskrat Falls Project. (2020, March 10). Retrieved October 19, 2022, from
https://www.muskratfallsinquiry.ca/

Flyvbjerg, B., & Budzier, A. (2019, January). Report for the Commission of Inquiry respecting
the muskrat falls project. Report for the Commission of Inquiry Respecting the Muskrat
Falls Project. Retrieved October 20, 2022, from
https://www.researchgate.net/publication/330382358_Report_for_the_Commission_of_Inq
uiry_Respecting_the_Muskrat_Falls_Project

Thornton, G. (2020, March 10). Commission of inquiry respecting the muskrat falls project.
Commission of Inquiry Respecting the Muskrat Falls Project. Retrieved October 19, 2022,
from https://www.muskratfallsinquiry.ca/

Roberts, T. (2019, April 3). Foundation miscalculation: Why the muskrat transmission line went
so far over budget | CBC News. CBCnews. Retrieved October 21, 2022, from
https://www.cbc.ca/news/canada/newfoundland-labrador/muskrat-transmission-
foundations-1.5083207

Sullivan, D. (2019, February 18). Second forensic audit report: Evidence of malfeasance?
SECOND FORENSIC AUDIT REPORT: EVIDENCE OF MALFEASANCE? Retrieved
October 21, 2022, from https://unclegnarley.blogspot.com/2019/02/second-forensic-audit-
report-evidence.html