Nfld. & Labrador

More blame for Astaldi as manager fingers contractor for Muskrat setbacks

Scott O'Brien was the latest Lower Churchill Project manager to lay much of the blame for the massive cost and schedule overruns at Muskrat Falls on the contractor, Astaldi.

'Astaldi failed to perform,' Scott O'Brien told public inquiry Thursday

Scott O'Brien is the project manager for the Muskrat Falls generating station construction site for Nalcor Energy. (Terry Roberts/CBC)

To hear Scott O'Brien tell it, Astaldi was a basket case when it started work on the Muskrat Falls project in 2013, and only managed to right itself a few years later with help from Nalcor's project team, of which O'Brien is a member.

"Astaldi was a problem contractor at Muskrat Falls. Astaldi failed to perform," O'Brien said bluntly during testimony Thursday at a public inquiry that is investigating the hydroelectric project.

O'Brien was just the latest member of the project team to cast some very serious shade over the company that was awarded the most valuable and critical contract for the project.

It's clear Nalcor believes Astaldi is the No. 1 reason why Muskrat is billions over budget and years behind schedule, and Nalcor witnesses are making sure Justice Richard LeBlanc, inquiry commissioner, understands this.

Astaldi Canada is a division of its Italian parent company, and was one of four companies that competed to build the powerhouse, transition dam and spillway at Muskrat Falls.

The bids were evaluated by SNC-Lavalin, the Quebec engineering and construction company hired by Nalcor to lead the project, and Astaldi won with a value of $1.1 billion — the lowest bid — in November 2013.

Astaldi struggled in a whole host of areas.- Scott O'Brien

In late summer of that year, Astaldi was given a head start on a list of priorities, including the design of a massive dome that would cover the entire powerhouse site to allow year-round construction and to maintain what's been accepted as a practically impossible schedule.

After an extensive career in the oil and gas sector, O'Brien has been an independent consultant since 2012, paid $1,600 a day by Nalcor to manage the generating side of the massive project. 

When asked by inquiry co-counsel Irene Muzychka to describe Astaldi's performance in the early going, O'Brien offered harsh criticism.

Astaldi completed "little to none" of its deliverables in the fall of 2013, said O'Brien, and the entire 2014 construction season was a total write-off because the dome project was a disastrous failure costing several hundred million dollars.

"Through that period, Astaldi struggled in a whole host of areas with respect to safety management, quality management, construction management, organizational ability, resources to support the work, documentation; the list is exhaustive," said O'Brien.

Nalcor to the rescue

O'Brien said the Nalcor team responded by establishing task forces and action plans to help Astaldi, and "engaged them about their needs and how they needed to move things forward."

"Astaldi was never encumbered in their delivery of the work by the team at Muskrat Falls. In fact they were supported in enabling them to deliver," he stated.

Dan Simmons (left) is the lawyer for Nalcor Energy at the Muskrat Falls inquiry, pictured Thursday with Scott O'Brien, who is a project manager for Muskrat Falls. (Terry Roberts/CBC)

But it was Nalcor who signed off on the hiring of Astaldi. Shouldn't people like former CEO Ed Martin have done more to identify potential shortcomings? 

And when Astaldi stumbled so badly before the contract was formally signed, shouldn't Nalcor have kicked out Astaldi and re-started talks with the other bidders?

Those are questions sure to be directed at Martin and other senior project managers when they appear before the inquiry in the coming days. 

Here's how O'Brien answered them Thursday:

"I can't speak to what was happening at the executive level, with respect to the negotiation and discussion with Astaldi. What I can tell you is that we remain concerned about Astaldi's ability to deliver on all fronts throughout the initial portions of their work."

At the beginning of 2015, Astaldi made some progress – but the dome fiasco nearly scuttled the entire project, and Nalcor was eventually forced to pay the contractor more than $700 million in order to keep work progressing.

But by last year, with its parent company foundering under a mountain of financial problems, Astaldi ran out of money and Nalcor evicted Astaldi from the project with much of its work completed.

Its contract is now being finished by Pennecon at a cost of what one Nalcor official under oath estimated at $150 million, but Astaldi is fighting to extract hundreds of millions more from Nalcor for its work on the project.

Avoiding 'mudslinging'

Meanwhile, O'Brien had to answer some uncomfortable questions from Muzychka about an earlier witness, Normand Bechard of SNC-Lavalin.

Like Astaldi, Nalcor said it encountered big problems with SNC-Lavalin that forced a major shakeup in that company's role in the project.

SNC was originally awarded the engineering, procurement, construction and management (EPCM) contract for Muskrat, but relations turned sour, and Nalcor eventually decided to establish joint-management teams which stripped SNC of its leadership role.

Former SNC-Lavalin project director Normand Bechard testified at the Muskrat Falls inquiry in March. (Terry Roberts/CBC)

Bechard was SNC's project director for Muskrat, and during his testimony at the inquiry in March, Bechard had some very unflattering things to say about O'Brien and his lack of hydroelectric experience.

O'Brien responded by saying Bechard was "in charge of an organization that was struggling to perform," and dramatically inflated the number of person hours it wanted to charge Nalcor after being awarded the EPCM contract.

O'Brien also accused Bechard and SNC of attempting to "undermine" Nalcor after SNC was stripped of the EPCM contract.

"With respect to his comments about me personally, I find that unprofessional and I think it speaks to Mr. Bechard's character more than it does mine. And I'd prefer not to enter into an area of mud slinging."

About the Author

Terry Roberts is a journalist with CBC's bureau in St. John's.

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