I understand and appreciate the fact that we need to stabilize the funding and move this thing along, but like I said, at the end of the day, I think those who didn’t deliver what they were supposed to deliver, whatever recourse the government has to ensure that happens, I think we should pursue it with vigour, Mr. Chairman.
The other question I have: this contract, and it hasn’t been signed as of yet with this company, and I suppose now that you’re going to make this document public it’s probably public knowledge that you’re close to signing or have signed a construction contract with one company. What is the amount of that contract and what is the contingency built into that price, as well, Mr. Chairman? Thank you.
Thank you, Mr. Ramsay. Mr. Neudorf.
Thank you, Mr. Chairman. The amount of the contract that has been negotiated with Ruskin Construction and their team as laid out in the package is, for the phase 2 work, $68.1 million. That is the amount that is noted in the table that we provided. There is still some work that Ruskin needs to do to complete the phase 1, the construction from the first season. There is about $4 million worth of work that will be carried over to next summer, mostly around abutments and finishing that work. Thank you.
I know the deputy minister said $4 million, but on the chart it says there is about $22 million of outstanding work by Ruskin on phase 1, so maybe, is it four or 22, because that is a big difference.
The amount shown on the chart, $22 million, is the amount that is required to complete the four piers on the north side plus the abutments, so the four piers will be essentially done in a couple of weeks. There will be $4 million worth of the $22 million that will be carried over to next year and completed.
The Member had also asked a question about contingency, the second last line item reports a contingency that is built into that $15 million estimate, or our $15 million supplementary request. Thank you.
One of the other areas of concern was the fact that the design has always been something that hasn’t been... We haven’t really arrived at a finalized design. I know the Minister just last week was talking about there being some components to that design that still are outstanding. The question I would have is: how can the government sign a contract with this construction company with those issues outstanding? Because in my experience, Mr. Chairman, going back to my days as a city councillor, when you start, design changes on the fly, it costs you nothing but money and it gets very expensive. So, Mr. Chairman, how can the Minister assure us that this number of $68.1 million is going to be a legitimate number? Because when you add those moving parts out there, with design issues, I think we are going to be in for some surprises, Mr. Chairman. Thanks.
We do have a final approved design on the bridge. We have been working since last August to get that. It has been very detailed, very involved. It has gone through two separate independent reviews and we are now very comfortable with the design that we have going forward and it is complete and finalized.
There are three aspects of that design that still remain to be finalized and there is a plan for doing that over the next couple of months. Those are relatively minor items representing about 2 percent of the value, that is why there is a line item there titled Miscellaneous Construction for $2.2 million that would be used to address the three minor items that are not yet finalized. Those three items are for lighting electrical, to finalize that and we are still waiting a little bit because we want to do some work on the toll collection system and see how that relates, and the design of a catwalk underneath the bridge to facilitate operations and maintenance inspections and then the final paving on top of the bridge, the design for that. Thank you.
Thank you, Mr. Neudorf. Committee, we seem to be still on page 6 here. Any further questions? Sorry; I have Mr. Menicoche.
Thank you, Mr. Chairman. In my opening comments I indicated the frustration of the people in my constituency about the increasing costs and they actually asked the question, why are we paying over here in Nahendeh when we will hardly be using the bridge. They actually brought up the fact that many other large infrastructure projects in other jurisdictions it is a full toll system for everybody, and one of the fellows brought up the Coquilhalla Highway and it actually pays for itself.
In this case, we are talking about a toll for only 18-wheel trucks or a certain amount of axels, but in other jurisdictions everybody pays and my experience travelling out east was that, yes, you are paying $5 or $10 to travel on a highway or travel across a bridge, but at least you are seeing that piece of infrastructure. So with that being said, is there any provision in our Concession Agreement to expand on a full toll system for another source of revenue, Mr. Chairman? Thank you.
Thank you, Mr. Menicoche. Deputy Minister Neudorf.
Thank you, Mr. Chairman. Just in terms of the frustration in increasing costs, I think it has been noted, but it is worth repeating, but the project is 50 percent done, so we are comfortable with that. The new design is compete and approved so there won’t be significant changes going forward. We do have a contractor in place and the contract for that work has been initialled. We just initialled this last Friday so we have got that signed up, and we have got a new and improved project management in place, so we think that we have much more oversight on the project that we will be able to control and ensure that we don’t get into the same type of situation that we have right now.
In terms of the tolls and paying for costs and potentially adjusting it for tolls, we have always, in the benefit costs, the economic analysis that we did, we wanted to keep the toll so that the actual cost of the toll was slightly less than the benefits that would be incurred by the public, by consumers as a result of that toll. So we had provided that information previously to the Members. The benefits of the Deh Cho Bridge were about $7 a tonne. Our toll was set at about $6 per tonne, so slightly less than. Of course the government had to make up the difference to have the project go ahead. The previous government agreed to an additional subsidy of $2 million to address the higher costs and we are here requesting another $15 million again to address some of the cost increases.
I would note that that $15 million is being funded as per the Concession Agreement, so the Concession Agreement speaks to the Government of the Northwest Territories providing upfront the additional costs that were required for the project, but we would get paid back over the life of the project from the revenues for the project. Thank you.
I would like to thank the deputy for that answer. I guess the frustration was that taxpayers from throughout the North don’t want to continue to see themselves paying out of their pocket for errors and, for lack of a better word, the situation that we are currently in with the Dehcho Bridge Project. People are still out there; they are absolutely convinced that this cost will not stop here and will be increasing. I don’t know how much assurance that the Minister or the deputy or the Transportation Minister can give us. Yes, we are 50 percent done and with this amended budget we can complete the project on a timely and on budget scenario. So just with that, Mr. Chairman, can the Minister give us that assurance that we won’t be sitting here in a few months from now, six months from now, deliberating a situation where our backs are against the wall, where we have to continue expending public funds and, therefore, taxpayers money on this infrastructure? Thank you.
Thank you, Mr. Menicoche. Mr. Miltenberger.
Thank you, Mr. Chairman. I know it is the fond hope from all of us that we don’t have to go this process again. We are going to make every conceivable effort to make sure we hit the targets, but we are not in the position to offer an ultimate guarantee. But we will be briefing Members on an ongoing basis here going forward as we work our way forward through these current challenges until we get this project stabilized and then going forward to conclusion. Thank you.
Thank you, Mr. Miltenberger. Next on my list I have Mr. Beaulieu.
Thank you, Mr. Chairman. I’d like to thank the department for the Deh Cho Bridge Project Estimate Summary. I find it kind of interesting that the issue doesn’t largely seem to be one of a construction nature. It looks like the actual construction costs have only increased by about 3.7 percent as the estimates that we’re currently receiving from the department from the estimates that were originally budgeted in May of 2009 compared to the estimates from the GNWT today that takes us to the end of the project. That’s only about a 3.7 percent increase. That’s actually pretty good.
I think our issues further down the page there are that there’s a substantial increase of the management and interest costs. I guess mostly in those areas and even the contingency’s gone down a bit. But it looks like the construction management and corporate management and interest costs are the majority of the request here. It’s almost $11 million of the request for $15 million. Almost $11 million of it is just management. This actually gives me a little more comfort to know that the construction costs have a little bit of control here. If it’s only estimated to be higher than what the original budget was from May 2009 by 3.75 percent, approximately, then it’s actually not too bad.
Maybe the issue here is not what’s happening over the waters of the Mackenzie but maybe more or less the management of the project seems to be a little bit out of control here. But to know that’s where the cost is, also recognizing that that type of cost is also a lot easier to control than had the cost been more unpredictable with the construction portion of the project. I am offering that as maybe something that would make it easier for the government to manage or control costs, because the majority of the costs seem to be in management.
It’s difficult to control interest costs, no doubt. I don’t know why the interest cost has gone so high from the original estimates. It’s almost $3 million and just change in interest costs. I’m not sure why that occurred if the money was advanced at a certain date and the schedule for payback is happening, or it’s scheduled to happen in the future, then I don’t know why the big shift in interest. Maybe I will ask that question of why the interest cost. I think the corporate management, construction management is probably self-explanatory, but I’ll ask on the interest costs.
Thank you, Mr. Beaulieu. Mr. Neudorf.
Thank you, Mr. Chairman. The reason the interest costs are going up is because it takes an extra year of construction. So we had planned on three years’ worth of interest and now it’s going to take four years. But that four years is also at the end when the majority or a lot of the expenditures have been made already. So as the funding is actually in the construction account right now, we are paying interest to the lenders but we’re also making interest on the money. So the net amount at present isn’t that big. But as we have less and less money in the construction account to gain interest, the net effect is increasing.
I’m good with that. Thank you, Mr. Chairman.
Thank you, Mr. Beaulieu. Next on my list is Mr. Yakeleya.
Thank you, Mr. Chairman. Just a couple of questions. Have the Ministers had an analysis of reducing the costs in my region by having a bridge here? In light of what we’re going to increase the budget for the bridge, I think the Minister of Transportation said it has a negative effect on the cost of living to reduce the cost of living. I know at one time it made sense, but now we’re adding additional dollars to it. Is this still the case to reduce the cost in the Sahtu and in Behchoko or Fort Providence or even Yellowknife?
Thank you, Mr. Yakeleya. Mr. Neudorf.
Thank you, Mr. Chairman. The information that I talked about before where the benefits of the bridge were $7 a tonne and the costs were $6 a tonne, that’s relevant to any traffic or freight that moves across the bridge and comes into Yellowknife. That would include the freight that would be moving forward into Sahtu communities, as the Member has asked. So it would realize that slight net benefit.
In terms of the total benefits, total costs, if you add up what all the benefits and what all the costs are and take it from a high level perspective, then that’s where the negative $50 million number has come up before. That’s essentially the subsidy amount that the GNWT has provided to the project.
Thank you, Mr. Neudorf. Anything further, Mr. Yakeleya?
Thank you. Is there a possibility of getting the latest explanation that the Minister gave us on paper for my reading and reviewing?
Thank you, Mr. Yakeleya. Mr. Miltenberger.
Thank you, Mr. Chairman. That information is available on the website for the Member’s ease of reference.
I will look at it and see if it eases my reference here. Okay. I have to read this before I have other questions I can speak later on to. That will be it for me.
Thank you, Mr. Yakeleya. Next on my list I have Mr. Ramsay.
Thank you, Mr. Chairman. One thing just picking up on Mr. Yakeleya’s question is that the tolls are indexed every year. The government doesn’t often like to say that. But the tolls are indexed as well as the $2 million is indexed. Everything is indexed in this project for 35 years. I just wanted to put that out there.
One other thing I wanted to touch on is next Thursday is coming pretty quick. Members are going to go back to their constituencies and Cabinet is going to do what Cabinet does, and that’s make decisions. I want to know how Cabinet plans on keeping Regular Members in the loop when it comes to this project, and what exactly is happening with this project and how that reporting’s going to take place when Members do go their separate ways. How are we going to be kept in the loop?
Thank you, Mr. Ramsay. Mr. Miltenberger.
Thank you, Mr. Chairman. There are a number of ways. We’ll ensure that is done. We can do it by e-mail. We can do it, keeping in mind what he situation may be, to try to set up a conference call. But probably the fastest way would be to e-mail and if there’s a need to get more collaborative feedback, then we can look at some type of hook-up on a conference call.
Now that the project has, like I said, for all intents and purposes, become a Government of the Northwest Territories project, I think the reporting on that project should be more readily available, let’s say, than it has been in the past. We should know on a day-to-day basis what’s happening with that project. I’m not saying I want to know on a day-to-day basis, but at least if Cabinet could keep Regular Members updated once a month or quarterly, even, as the project moves forward, I think that would be good. It’s always better to hear from our Cabinet colleagues than from the guy or woman on the street. So I’d appreciate that. Thank you.
We’ll of course commit to keeping the Members as fully apprised as we can going forward and we’re also working on improving our public communication so we can address some of the concerns that are out there with the facts and not rely on other information, but give everybody the best information that’s the most current and available. Thank you.
Just another thing, you know, a lot of Members have talked about it and I’ve talked about it in the past, but the Government of the Northwest Territories, the Department of Transportation has obviously had to incur some costs. I mean, we’ve got a couple of senior staff here that are on the project management team. You know, I’m sure we’ve paid for some of the design review work that’s been ongoing. How are we accounting for that? Is that not incorporated in the budget of the bridge or should it be incorporated in that? You know, if we can get some of the costs back as the Minister has mentioned, this $15 million over time I suppose we could recoup some of that back. Why don’t we charge whatever the Department of Transportation is incurring for costs back to the project so we can recoup that cost, Mr. Chairman? Thank you.
Thank you, Mr. Ramsay. Mr. Neudorf.
Thank you, Mr. Chairman. We can certainly look at that, but anything that the government provides to the project now it’s going to be in addition to the budgets that are here. So it will be government paying one way or the other. Just in terms of since the signing of the Concession Agreement and our expenditures, direct expenditures are about one-quarter of a million dollars or so and it was for some additional analysis that had to be done.
One of our biggest expenditures was actually the design review. So the GNWT hired the territorial advisors that actually undertook the design review. Those were, or have been, paid for by the project and then it’s just some GNWT staff time that’s being incurred as a result of that. We’ve had to hire one extra person additionally. We’re funding that from within and then it’s added to the workload of various other people in DOT that are noted on the chart there. Thank you.
I think the deputy minister makes a good argument, then, for charging all that time back to the project. The deputy minister himself... I know the Department of Transportation is busy with many other things that they’re doing and I know the deputy minister is committed to seeing this project through to conclusion; he spends a lot of time on that project, the Deh Cho Bridge Project. The deputy minister should be charging his time back to that project, Mr. Chairman, so we can at least get that back down the road and I’d like to see us make the effort at least to do that.
One other thing, Mr. Chairman, I just wanted to ask if any other contracts are required on the Deh Cho Bridge, whether the government would commit to at least going out to tender on any other work that’s required? Thank you, Mr. Chairman.
Thank you, Mr. Ramsay. Minister Michael McLeod.
Yes, we could commit to that. That’s always our intention, is whenever the ability and the time allows for public tendering of any types of contracts, that we use that method and that’s something we’ll certainly commit to doing.
I heard that, but I didn’t hear the commitment to make the effort to charge every hour that our departmental staff has spent on the Deh Cho Bridge Project to the Deh Cho Bridge Project so that we can recoup that money. I didn’t hear a commitment to do that. Thank you.
Mr. Chairman, I’m not quite ready to do so. I would have to look at the impact of charging back to this project and whether that’s something we’d have to incorporate to all our projects. Right now we don’t charge back our time for any project across the Territories. That’s something I could have a discussion with my Cabinet colleagues. We certainly could calculate the amount of time that our staff has spent, any costs incurred by our department, but I’m very reluctant to say we’re going to charge it back. It may have a further bearing impact that we anticipate at this point. Thank you.
Thank you, Minister McLeod. Nothing further, Mr. Ramsay? Moving on. Mr. Hawkins.
Thank you, Mr. Chairman. I’m certainly supportive of the bridge and I see this as a 9 percent overrun and we need to address that sort of in the public context, which is going through and I can understand that. Anybody who has any experience with any works projects understand overruns, as unfortunate as it is, it is certainly not uncommon, especially in a public context.
I’m wondering if the Minister of Finance would be opposed to a suggestion of quarterly updates to the Priorities and Planning committee. Would he have any thought on that, because that’s really, from my constituent point of view, that’s one of the big fundamentals, is keeping a close eye on the project. I know the Minister can only do his sort of fullness and timed responses, you know, is the best we can do sort of context of will this project be managed well, of course it will, you know, those types of statements. But the fear from a Regular Member point of view on my particular position is what do we do to make sure the project stays on the rails. So how would the Minister feel about quarterly updates to the Priorities and Planning committee meeting to make sure that the detail of the finances are kept up regularly to Regular Members through the Priorities and Planning? Would he be opposed to that? Thank you.
Thank you, Mr. Hawkins, and I think that was something where a commitment was already made, but, Minister Miltenberger.
Thank you, Mr. Chairman. No, we would not be opposed to that.
In that particular case, the Minister probably wouldn’t be opposed to a motion to that effect. I mean, ultimately constituents of mine are more concerned about making sure the project gets done and that it stays on the rails, as well as the fact this timely information becomes the biggest issue. So, Mr. Chairman, with that I’d probably like to move a motion and shall I read it right into the record now?
Go ahead, Mr. Hawkins.
Thank you. Mr. Chairman, I move that this committee strongly recommends that the Government of the Northwest Territories provide quarterly updates on the status of the Deh Cho Bridge to the Priorities and Planning committee starting in May 2010. Thank you, Mr. Chairman.
