Sunday 11 August 2013

Hydro Riel Station Project not going so well.

On the list of proposed and current Manitoba Hydro capital projects, the Riel Reliability Improvement Initiative Project is one of the lesser known. It is not as big or contentious as Bipole III or Conawapa, but it is still a significant project by most standards.

The $700 million dollar project to "sectionalize" Hydro's southern electricity distribution is intended to improve reliability and facilitate importing power from the US in a circumstance where our power supply suffers a catastrophic failure. You can read more about it on the Hydro web site if you want, but what you should know is that this investment is being made. What you should also know is that, like most of Hydro's recent projects, it is going to be behind schedule and over budget.

Now I don't know that for a fact, but signs are pointing in that direction. The Riel Converter Station was anticipated to be operational by 2014. That gives them 4.5 months to get this thing up and running, and the things that I'm hearing suggest that it is nowhere close.

One problem: one of the lead contractors, Comstock Canada, has declared bankruptcy. Because of its financial woes it failed to pay subcontractors working on the Riel project, and some of those subcontractors understandably stopped working. Comstock owes creditors almost $76 million dollars, ranging from $200 for Windsor Plywood to $3.7 million for Crown Utilities Ltd (which itself has been involved in probably unrelated lawsuits with Manitoba Hydro as recently as 2010.)

With the subcontractors off the job, aspects of the Riel project ground to a halt until eventually Hydro agreed to pay the subcontractors directly. Of course, when one part of a very complex project falls behind schedule, it normally impacts everything else because of overlapping dependencies between the various workstreams. In short, this whole Comstock issue has been very unhelpful.

By the way, Comstock has other troubles too -- it is embroiled in a $50 million lawsuit with Potash Corp and AMEC Americas over a failed project in New Brunswick. Potash Corp terminated their contract because they didn't get their work completed on time or on budget, or to the satisfaction of Potash Corp and AMEC.

Comstock meanwhile claims that Potash Corp and AMEC made life difficult for them by changing requirements all the time. Comstock therefore had no choice but to "perform its work out of sequence, in an 'inefficient' and 'unproductive manner'".

Perhaps it's no coincidence that work on the Riel Station is being performed in an inefficient and unproductive manner.

It is apparently commonplace on that project for work to be repeated or changed on the fly because of poor planning and coordination. For example, concrete will be poured, then it will be torn up because cabling needs to be installed underneath the concrete. Mistakes will happen on a large project, but that sort of thing is happening a lot more than it should on this Riel project.

I can't say if one particular entity is responsible for the poor work flow and mistakes that are made in the construction of this station, I just know that it's not going well, and ultimately it's Manitoba Hydro's responsibility to ensure its projects are properly managed.

I wonder what the new target date and projected cost is for this project...

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