NOTES – MORNING SHOW INTERVIEW WITH ANTHONY GERMAIN

Notes – CBC Morning Show Interview, December 22, 2015
            Host: Anthony Germain

E&Y Review not a Review of Muskrat Falls project.

·      
Not conducted because people in NL are
concerned about cost overruns, or that they might have to sacrifice programs
and services.


·      
THIS IS ABOUT “comfort” for Bond Rating Agencies,
given the amount of borrowing to be conducted. 
About Opening the tap on maximum debt….

·      
The Government wants to be sure it can borrow all the
money Nalcor needs, not whether the project is managed by competent people or whether
it makes financial sense. 


·      
Government also needs the figures in order to prepare
the 2016-17 Budget.

·      
Not having taken the opportunity to properly evaluate
the project, it seems content to ignore the fact that Muskrat may need billions
more, and to kick tough decisions down the road.


E&Y wrong Firm to
perform the Review

       E&Y is an accounting firm first and foremost –

       
E&Y has been working with the so-called
Oversight Committee for over a year; it has just completed a review of the
Project Cost and Schedule Management system…so for the last year they have watched
as the Oversight Committee took Nalcor’s
cost and schedule projections
and publish them as review and oversight in
which the government and the public should have confidence….

          Why do we need more of the same?

What type of Reviewer do we need?

                  This is a project that needs independent
engineering review; it needs a Firm skilled       in mega project construction,
specifically the construction of hydro projects.

       
E&Y has far less capability than large engineering firm
with the systems and expertise to assess a mega project of this size….this is a
job for an engineering Firm with very specific expertise.

       
E&Y has no ability to assess
the realism of Nalcor’s cost, schedule, or productivity
assumptions 

What E&Y won’t be mandated
to do….what the Review will not answer, that needs answering:

·      
Won’t review Nalcor senior management


·      
Won’t review the competency of the project management
team


·      
Won’t be mandated to review Astaldi, the major
contractor on the powerhouse. Nalcor has acknowledged the Company is significantly
responsible for the project going off schedule; Company’s first job in Canada;
no experience in cold northern climates (failure to complete multi-million
dollar “dome” just one example of a Company not equipped for the work; yet
chosen by Nalcor CEO Ed Martin.


·    No North Spur review 

·  No Quality Assurance Review

·      
In the private sector, a project shut this down would
not be excluded from options. All reasonable options would be costed, then decisions taken.

The public might ask themselves: why has Mr. Ball given
a vote of confidence to the senior management of Nalcor?


       
Under current management
the project has gone from $5 billion to $8 billion ($9.05 billion incl. Interest During Construction).
That’s a 60% increase.


       
The Liberty
Group, studying Hydro management in the wake of DARKNL, concluded incompetence,
not excessive demand, chief problem.


       
Nalcor CEO Ed
Martin can’t or won’t confirm a completion date or a final cost figure.


       
Even if the Muskrat
Falls project doesn’t go over Budget another cent Newfoundlanders are going to
pay some of the highest costs for electricity in North America…and no one
believes red ink has stopped.


       
We
know that Nalcor has all the labour risk; the contracts are essentially cost
plus. EVEN the latest E&Y report suggests project costs are going higher.


So, based on what, does the Gov’t have
confidence in Nalcor?


What is Ball’s threshold for losing
confidence in Ed Martin and Nalcor?

Premier Ball even expressed confidence
in the Oversight Committee; stated that E & Y Review would go through
that Committee prior to release. Ball has embraced “sham oversight”, exactly as
the Tories constructed it. Last Oversight Report was issued for the period
ending the last of August, 2015!


The Committee should be fired rather
than encouraged!

Ball’s first steps: a betrayal of those
expecting “Real Change” – not serious about notions of transparency and
accountability.

Politically, Liberals will pay dearly.
Muskrat Falls will be allowed to compete for funding with hospitals, schools, and roads without public having any idea of final cost of the project or whether a thorough Review would have increased management and other efficiencies.



– Des Sullivan

-30-

Des Sullivan
Des Sullivan
St. John's, Newfoundland and Labrador, Canada Uncle Gnarley is hosted by Des Sullivan, of St. John's. He is a businessman engaged over three decades in real estate management and development companies and in retail. He is currently a Director of Dorset Investments Limited and Donovan Holdings Limited. During his early career he served as Executive Assistant to Premier's Frank D. Moores (1975-1979) and Brian Peckford (1979-1985). He also served as a Part-Time Board Member on the Canada-Newfoundland Labrador Offshore Petroleum Board (C-NLOPB). Uncle Gnarley appears on the masthead representing serious and unambiguous positions on NL politics and public policy. Uncle Gnarley is a fiscal conservative possessing distinctly liberal values and a non-partisan persusasion. Those values and opinions underlie this writer's views on NL's politics, economy and society. Uncle Gnarley publishes Monday mornings and more often when events warrant.

OPINION POLL OVER-RATES INEFFECTIVE TORY OPPOSITION

Having survived in spite of themselves, in Opposition the Tories have been lazy and uninspiring.  The fact that it is summer, and the House of Assembly is closed, admittedly makes their job tougher, except that the Party’s manifest weakness is not a seasonal problem.

REMEMBERING CABOT MARTIN (1944-2022)

He was an exceptional person. A gifted intellect for sure; irascible and argumentative, too. What endeared him to many was not just that he was analytical and insightful, but that he was honest and forthright. He was a public policy wonk; resource policy interested him most. He loved to travel and read; people, with something to say, were always important.

GNL RUSHING INTO ANOTHER “SCHEME”: CABOT MARTIN

I must say that after the Muskrat Falls fiasco, I thought our government had finally learnt its lesson and would not to rush into another such scheme where calling it “green” was enough to suspend all critical analysis.

1 COMMENT

  1. The EY document released yesterday had some startling commentary about Nalcor's scheduling practices. They dont include contractor schedules until they are fully approved, they dont consistently report earned value.

    Without incorporating contractor data in real time, and adjusting forecast based on historical productivity there can be no faith in the integrated control schedule. This is why Nalcor and Ed Martin have been unable (not refused, but unable) to provide a completion date.

    Without a completion date, there can be no assessment on final costs.

    Without final costs, it is unclear how much we will need to borrow.

    It all comes down to Schedule. EY need to get the best heavy construction PM in North America, and dissect Nalcor's schedule. Without knowing what the completion date is, the rest of it is just billable hours.