Municipal and Community Affairs, operations expenditures, total department, $305,000. Agreed?
Agreed.
Ms. Bisaro.
Thank you, Mr. Chairman. I do have a question on this page. The $315,000 that is identified here to complete the planning study rebalancing the portfolio of owned versus leased office space. My question is not I support the project. I guess I’m just wondering why this needs to be in a supplementary appropriation, why this couldn't wait for the next infrastructure budget.
Thank you, Ms. Bisaro. Just to confirm, we’re on page 5, Municipal and Community Affairs, operations expenditures, Town of Inuvik paving. So we’re, yes, Municipal and Community Affairs, operations expenditures, total department, not previously authorized, $305,000.
Agreed.
Page 6. Mr. Ramsay.
Thank you, Mr. Chairman. I guess I’d just like to start out by applying a little bit to what Mr. McLeod had to say. I think the project did make sense when it cost $60 million and it would be self-financing. It made absolutely no sense when the government had to ante up the $2 million extra a year indexed, I must say, for the next 35 years and commit every government for the next 35 years to that expenditure. I would beg to differ with the Minister on whether the project made any sense. Also given the fact that it was a substantial negative cost-benefit to this Territory by building the bridge at $165 million. I can debate that until the cows come home with my colleagues across the floor, but that’s my belief, is that it never made any sense at that price tag.
There’s a reason. I know the previous government went to Ottawa looking for money for this project time and time again. Every time we increased the loan guarantee to the Deh Cho Bridge Corporation the former Premier said the money from the feds is being worked on, it’s going to come and the project won’t go ahead unless we get the money from the feds. I can quote him from many meetings we were at saying exactly that. The money never materialized but the project did.
The reason the federal government didn’t come to the table with any substantial infrastructure dollars on this project was twofold. One, they were planning this P3 initiative national campaign that’s started up now that we could have subscribed to had we waited a couple of years. The other thing is, I don’t believe the federal government ever believed that a bridge across the Mackenzie River to service 25,000 people was a good expenditure of public funds. And I’m just being straight up honest.
I know there are a lot of people here in Yellowknife that think we need a bridge and we want a bridge. I want a Ferrari too, but I can’t afford a Ferrari so I’m not going to go out and buy one. That’s the mentality of the last government, was we can’t afford a bridge but you know what? We’re going to go out and get this bridge anyway. No matter if we have to mortgage the future we’re going to get that bridge. That’s what we’re doing, is we’re mortgaging our future, future projects of this government for this bridge. Make no mistake about that. That’s happening.
Now, I just have a few questions here. I’d like to thank the Minister for this package of information. Perhaps he could get us a clean copy that’s got names we can read on the project organizational chart and the Ruskin Management org chart. We can’t read the names that are on there. I’d like to get a clean copy of that.
Also, I want to talk about the project management team that the government has offered up. Has anybody on our project management team -- and I’m talking about people that are going to be available on a day-to-day basis -- had any experience building a multi-million dollar bridge across a river?
Thank you, Mr. Ramsay. Mr. Miltenberger.
I apologize for the poor copy. We’ll send this electronically to all the Members so they can see it clearly. With your indulgence, I’ll ask Mr. Neudorf to respond to that question.
Thank you, Mr. Miltenberger. Mr. Neudorf.
Thank you, Mr. Chairman. We certainly have assembled what we think is a good team with all of the qualification skills required in order to successfully conclude the project. It would start with the contractor that we have in place and including their major subcontractors, which are laid out. We have signed up Associated Engineering and they have a qualified team in place that have been supervising and do have the skills and abilities to undertake and manage a bridge of this magnitude. We’re very confident in the skills that they have along with all the subcontractors that they’re going to be bringing to the bridge.
We do have on our own project team. Certainly there are lots of people who are very familiar with building bridges and very familiar with building bridges in the North. We have never built a $160 million bridge, but that is why we are bringing in the Associated Engineering team to help us manage the project and all the details. You’ll see on the GNWT side that there are many people involved. We want to do whatever we can to ensure that going forward it’s going to be successful and that we will be able to meet the commitments that we have laid out for you here.
Final comment is there is also a lot of other information available in terms of the project teams and their corporate experience and individual resumes. If committee would want that, then we will be pleased to provide that to committee as well.
Thank you, Mr. Neudorf. Mr. Ramsay.
Thank you, Mr. Chairman. Under the project coordination under the org chart for the Deh Cho Bridge Project and Construction Management Structure, maybe it’s blacked out somewhere, but under the project coordination I don’t see Associated Engineering anywhere under the project coordination heading. Also, under that project coordination heading I’d like to ask the Minister or deputy minister who has experience building a 1.1 kilometre bridge across a river anywhere on this project coordinating team.
On the Project Construction Management Structure Chart that was sent out, the boxes in the middle that are orange and then down to purple and green and yellow at the bottom, that’s all the Associated Engineering team. So project manager, project engineer, on-site supervisor, carrying all down, those are all Associated Engineering people and they do have experience building this type of bridge.
When you start looking at us approving this $15 million -- and I don’t believe that’s the end of it, I think there will be more -- you go back in time and I don’t think the project made any sense once the government had to ante up that extra $2 million. That decision was made by the previous government. My constituents and the people that I represent and the reason I’m here are to hold people accountable and responsible for decisions they make or don’t make. There have been alarm bells going off on this project since day one. There have been problems with the subtrades. There have been problems with the general contractor. There have been legal issues. There have been design issues. You name it; there’s been the full gamut of issues on this project from day one. So how come somebody over there didn’t step up to the plate and remove that project management team long before we got to this stage of the game? Who ultimately takes responsibility for that inaction?
Thank you, Mr. Ramsay. Mr. Miltenberger.
Thank you, Mr. Chairman. As the Member pointed out, there’s a history to this project with some considerable trials and tribulations. Our responsibility as a Cabinet and as a government and as a Legislature is to manage our way through this. I’m sitting here as the Minister of Finance. Mr. McLeod, as Mr. Ramsay pointed out, is the Minister of Transportation. And, of course, the Premier is here as well. Collectively as a Cabinet we’re intent on managing our way through this. As Finance Minister I’m accountable in the role that I play and we are here to manage our way through this and we are accountable to make sure we get this done in the best way possible.
I appreciate the response from the Finance Minister. I know we need to move forward. There’s no sense crying over what hasn’t happened in the past two and a half years that this government has been responsible for this project. Nobody wants to take responsibility for the inaction. That’s fine. But going forward -- and I’m talking about from right now -- somebody has got to take this project on and take responsibility for it being delivered effectively, efficiently, on time, and on some kind of budget. We can’t have an endless pit of money being dumped into this project with nobody taking responsibility for it. I’d like to ask the Minister going forward... Let’s not talk about the past, let’s talk about going forward. If this project continues to slide off the rails and go sideways, who is going to be responsible to the taxpayers in the Northwest Territories?
I’d like to point out that while there are certain challenges ahead of us, that this project is 50 percent done. We have made a lot of significant changes. The Member may disagree with the timing of the decisions that were made and when they were made, but we are in fact moved forward on this.
The GNWT has taken over project management design, as we have indicated. With our ongoing discussions, the lenders are leaning towards the GNWT assuming a greater role and we have been stepping into that role. The Cabinet here duly assembled was put in place by this Legislature. We are accountable. I indicate once again that I am here as the Minister of Finance with my role to play; the Minister of Transportation as well; and, of course, the Premier has delegated our portfolios to do that. The final analysis is that we stand accountable and we stand accountable to the Legislature.
Thank you, Mr. Miltenberger. Page 6, Transportation, operations expenditures, highways, not previously authorized, $15.9 million.
Agreed.
Transportation, operations expenditures, total department, not previously authorized, $15.9 million.
Agreed.
Thank you, committee.
Thanks, committee. Mr. Menicoche.
Thank you very much, Mr. Chairman. I just want to know from the previous item if that information shared with us on the timelines was able to be shared with the public.
Thank you, Mr. Menicoche. We’re back on page 6. We’re still on page 6. Mr. Menicoche is asking whether or not the information package the Minister gave committee today can be shared publicly. Mr. Miltenberger.
Yes, Mr. Chairman.
Thank you, Mr. Miltenberger. Anything further, Mr. Menicoche? We’re on page 6, Transportation, operations expenditures, highways, not previously authorized, $15.9 million. Mr. Yakeleya.
Also I just want to ask the Ministers about the role of the Deh Cho Bridge Corporation in the new arrangements and setup going forward for the corporation and the status of the corporation for this bridge here.
Thank you, Mr. Yakeleya. Mr. Miltenberger.
Thank you, Mr. Chairman. We continue with the current arrangement with the Deh Cho Bridge Corporation. The Members are aware that there are negotiations and activities underway, but at this point we are proceeding with the structure that has gotten us this far. As we sort our way through the work ahead, we’ll be keeping committee fully apprised of any developments.
Thank you for the update here. The Minister stated that they’re continuing with the relationship with the Deh Cho Bridge Corporation. Are there going to be some changes? Because the way we’ve been dealing with the Deh Cho Bridge Corporation has gotten us to this place right here. If that’s the case, then I’m not feeling too comfortable in terms of if things are going to change, because right now we have a $15 million supp that is going through the process here. I hope some things are going to change in terms of our relationship with the Deh Cho Bridge Corporation. Otherwise, are we going to come back to see another $15 million supp? I need some level of comfort, I guess, from the Minister.
Mr. Chairman, the project management, as it is now set up to involve the territorial government, is going to continue on. The corporate structure that is currently there will continue until we sort out the implications of our discussions with lenders. But the project management is now fully and firmly going to be run by the Government of the Northwest Territories Department of Transportation. Thank you.
Thank you, Minister. That does tell me with the new structure now I feel that Ministers have heard our concerns on this side here and a tightening of the belt, so to speak, in terms of how we proceed to conclude the construction of the bridge here with the corporation.
I guess there are a lot of things that we really can’t say because of the sensitivity and the negotiations and the confidentiality of some of the issues here, so I guess I’ll wait to see in terms of on a going forward basis dealing with the Deh Cho Bridge Corporation, because they were one of the key players in this whole business of putting the bridge across the Mackenzie River here.
I appreciate the Member’s comments. Thank you.
Thank you, Minister. Mr. Ramsay.
Thank you, Mr. Chairman. Just a few more questions on the $15 million. As I understand it, the lenders issued real-return bonds which are adjusted for inflation. I guess they’re slated to be interest only until December 1st of 2011, at which time we’d make the first payment on the principal. I’m just wondering, what portion of the $15 million that is in this supp is going to pay interest costs, and can the Minister provide us a breakdown of where that $15 million is being allocated to the project. Thank you.
Thank you, Mr. Ramsay. Mr. Neudorf.
Thank you, Mr. Chair. The Member is correct that the $15 million is added and it will bring the total project budget to $181.4 million. The breakdown of that $181.4 million is provided in one of the tables titled Deh Cho Bridge Project Estimates Summary. So in the final column it breaks down how the $181.4 million will be spent and that includes the $15 million that is being requested today.
In terms of specific interest payments, actually, the one-year delay in the project will cost additional interest of about $5.5 million. Thank you.
I thank Mr. Neudorf for that. On the breakdown of the $15 million, though, if you look at the projected estimate, February 2010, if $5.5 million is going toward interest, where’s the other $9.5 million going? Thank you.
The other $9.5 million is going to the various items that are noted. If you want to break it down a little bit further, the actual construction has gone up a little bit, but stays more or less the same. There’s about $7.5 million of claims to deal with from the first two years of construction, so a portion would go to that. Then, with the Bridge Corporation and their uncertainty in equity around the changing of the general contractor, then we require an additional $2.5 million to replace that money. So $5 million interest, $7.5 million in claims and $2.5 million lost equity would equal $15 million. Thank you.
I’m just wondering, too, if we’re just paying interest only up until December 1, 2011, are the total project costs building up on themselves over that period of time, because we’re not actually making payments. Are we going to expect an inflated project cost on December 1, 2011, than what we’re talking about today? Thank you.
The total project cost noted here is what we expect the total cost to be to get us to a completed bridge in November 2011. With the financing on the project, all of the money was given upfront to the project. So $165.5 million from the lenders was given to the project. It’s sitting in construction accounts, and as expenditures are incurred, the project draws upon that funding. So some of the expenses would include the interest cost on that borrowed money, as well, which is included in the estimates. Thank you.
On a construction infrastructure project like the Deh Cho Bridge, I’m just wondering, in terms of management, construction management, corporate management, things like that, typically what would a project like that encounter in terms of a percentage of cost. If we’re looking at close to $30 million on construction management, construction overhead, to me that number seems a little bit inflated and it’s close to 15 percent of the total project costs. I’m just wondering, is that industry norm or standard or how do we explain that. Thank you.
Typical project management related costs for a GNWT-managed project would be 10 to 15 percent, maybe 8 to 15 percent. So this is obviously on the high end of that. I’d attribute it to the structure of the project. It is a P3 project; it took us a long time to get it to where we were ready to sign the Concession Agreement. It’s got a lot of oversight on it because of the magnitude of the funding associated with it. So it’s at the high end of what you would expect. Thank you.
Mr. Chairman, I’m just wondering if there is any legal recourse for the Government of the Northwest Territories to pursue the Deh Cho Bridge Corporation for their inability to deliver the project on budget. The design, like I said, the issues with the design, the issues with the subcontractors, the issue with the general contractor. They’ve been removed. I mean, can we go back after the Deh Cho Bridge Corporation to recoup some of the costs that they’ve forced the government to incur? Thank you.
Thank you, Mr. Ramsay. Minister Miltenberger.
Thank you, Mr. Chairman. There are a number of options like those available for a number of different facets of this project. They key for us now, though, is to get the project stabilized, get the funding sorted out and flowing so that we can, in fact, conclude this project, and do as Minister McLeod indicated, a review, and see where that information and review would take us in terms of next steps, once we’re past the immediate challenge and imperative, which is to get this project stabilized. Thank you.
