Time to ask why Kiewit keeps getting the bids.. even when things go wrong. A story within a story.
Yes, I say it is time to start putting toll booths on the Sea to Sky highway, especially considering this new lawsuit BC Hydro and BC Transmission Corporation filed against Peter Kiewit and Sons – the contractor who built and maintains the splashy new drive. The Vancouver Sun has the story tonight : http://www.vancouversun.com/Hydro+BCTC+suing+highway+contractor/2088312/story.html
BC Hydro and BC Transmission Corporation claim they are owed almost $400,000 by road contractor Peter Kiewit Sons for consultation services provided on the Sea to Sky Highway construction project.
In a summons filed this week in B.C. Supreme Court, Hydro and BCTC allege that Kiewit agreed to pay the Crown-owned utilities’ costs to monitor the Sea to Sky Highway 99 expansion project in proximity to high voltage transmission lines between West Vancouver and Whistler.
Sure, why shouldn’t the province install some toll booths over there? After all, isn’t that our money BC Hydro is using to file the writ and duke it out in court? Legal proceeding in Supreme court are very costly, unless they come to a settlement within a short time. Seems to me, that with all that expected traffic heading out towards Whistler over the next few months, it just might be the way to recover costs -and then some! Heck, I bet the tolls on that highway alone, could pay for the Port Mann bridge too, thereby saving valley residents that added and unaffordable twice daily charge.
It was October 2008 when I first called for tolls on that highway, and highlighted the inequity of the failure to pay for that highway improvement project through tolls, as compared to other projects . I still feel the same way.
Gregor Robertson, mayor of Vancouver , has since put forth that very same idea.
Here’s an excerpt of my blog post from last October :
As a taxpayer in the province of BC, I have a question for the transportation minister, Kevin Falcon, and our Premier Gordon Campbell.
The Golden Ears Bridge project costs $800 million and will be a toll bridge to cover costs.
The Port Mann Twinning project will cost $1. 5 billion, and again, will be a toll bridge to cover costs. ( note: this was the original cost the province announced -LY)
The new Patullo Bridge project – cost unknown but guaranteed mega$$$$$– already is planned to be another toll bridge.
THE SEA TO SKY HIGHWAY PROJECT – $ 600 miliion dollars – or more – NO TOLLS.
Those toll booths on the Patullo, Port Mann and Golden Ears bridges will be faced directly by residents of Surrey and Langley – and it hardly seems fair. Both the Sea-to-Sky highway and the new Kelowna bridge, as well as the Pitt River Bridge (part of the province’s Gateway program), are all TOLL FREE.
My question to Premier Gordon Campbell ? Why is that very expensive Sea to Sky highway toll free ? Why are some of us getting dinged up to three times to get from the suburbs to our work locations, and yet all the millions of people who drive up to Whistler all summer, and every winter get to do so for free? Put those toll boths on that highway, now!
Now, what makes this news story about the law suit soooo interesting to me, is that Peter Kiewit and Sons are also one half of the joint venture contract team charged with building the Port Mann Bridge project. Originally that project was deemed to be a P3 venture, but after the contractors financing tanked, the province decided to keep them anyways and do the bridge as a public project.
I don’t know about you, but I’ve always wondered why the province would keep a contractor(s) whose failed to meet the financial terms of the contract. In other industries, a failure to meet those terms would have resulted in the contractor being dis-qualified and the next highest bidder would have been given the opportunity. Makes sense, right? You don’t need to be a road builder, or a CEO to get that concept.
But in this case?
No. Didn’t happen- the province instead made the Port Mann Bridge build a public project and kept the contractor(s) who couldn’t ante up the money for a successful P3 .
Ironically, their failure to get financing is a good thing for the people of BC, because it actually saves the government some money as a public project! Kevin Falcon, transportation minister at the time, even admitted that the government can get lower financing rates than a private contractor could: http://www.theprovince.com/news/Port+Mann+bridge+will+finished+year+ahead+schedule/1507622/story.html
The government will build the bridge as a public project rather than a public-private partnership, as originally planned.The about-face will save about $200 million, in part because the government can get lower financing rates than a private partner could,Transportation Minister Kevin Falcon said….
Capital cost of the project, which includes the widening of 37 kilometres of Highway 1, is estimated at $2.46 billion. Total costs, including operations and maintenance, had been expected to be $3.3 billion, but Falcon said it will be closer to $3.1 billion, partly because the government can get financing at lower rates than a P3 could…
( umm… if the government gets lower financing rates, then why do a P3 project at all? )
Now, the contractor on the Sea to Sky highway, Peter Kiewit and Sons, is being sued in Supreme Court by BC Hydro and BCTC.
That same contractor – who allegedly failed to pay a pretty big bill submitted by those public utilities – was kept on by the BC government to build the Port Mann project….despite the fact their financing fell through last year..
Talk about ‘Things that make you go HMMMMM’…
The whole scenario drew me back to a letter I received from a rather knowledgable reader recently, one that I’ve been mulling over for some time because of the nature of the contents.
Here is the letter, with links inserted by myself where I think it to be appropriate. I think it raises some valid questions about the Port Mann Bridge project, especially in light of the news regarding the BC Hydro/ Peter Kiewit lawsuit :
I don’t know how familiar you are with the Province’s highway construction programme, but I’ll assume you know nothing and lead up to my most recent peeve.
In the ‘good old days’, before P3’s, when the Province wanted to build a road or bridge, they designed the work, put it out for tender and the lowest qualified bidder was awarded and built the work. Any contractor that had the financial wherewithall, as determined by his bonding company, was ‘qualified’ and entitled to bid on the work, often resulting in 15 or so bidders.
The process was known as Design/Bid/Build. The Province provided the Design, often a Bill of Quantities to ensure that all were bidding with the same parameters, and often made available certain materials, such as gravel and asphalt oil, to reduce the risk and level the playing field.
Under the recently developed P3 process, when the Province decided to build a road or bridge they invited ‘Expressions of Interest’ from (presumably) these same contractors.
However, the projects were usually considerably larger resulting in fewer contractors that could meet the financial qualifications.
Those that could, and considered the risks warranted it, submitted their expression of interest. from which the Province (by some method unknown to most) selected 3 contractors that would be permitted to Design/Build/Finance/Operate the said works (DBFO).
A rigid set of parameters would be provided to those three (the rest being left in the dark as to why their expressions weren’t considered) that outlined the extent of the work and the specifications that were to be adhered to. The Port Mann project, for example, defined the start and end locations, the number and location of the additional lanes, bridge location, Highways Specifications and offered a number of Provincial owned gravel sources.
The chosen three were then responsible to design and price the work.
The results were assessed by some unknown agency and the work awarded by some unknown process to one of the three.
The difference between the ‘G.O.D’ and the ‘P3’ is that the contractor, instead of the Province, was responsible for the Design. Fair enough, but it increased the risk to the Contractor and Contractors don’t take risks without charging for them.
Furthermore, the ‘successful’ Contractor (Contractors are ‘successful’ only when they make a Profit – not just because they have ‘won’ a Contract) was charged with Financing the work, and Contractors also charge for Financing – usually at a rate considerably more than the rate that Provinces charge!
Anyway, let’s assume that the Port Mann project was awarded to Kiewit by a knowledgable ‘unknown agency’ and that it was done so on a fair and equitable basis without any bias. (Is that a fair assumption? – I don’t know!!)
As we all know, the wheels fell off Kiewit’s Financial Organ, not once but twice. ( here is where I find this letter so compelling – L.Y.)
Under the old scenario, the Province would have confiscated their 10% Bid Bond and awarded the work to the next lowest bidder.
In this case however, the (almost-broke) Provincial Government undertook to provide at first one billion dollars financing, which they later increased to three billion.
This begs the question: where in the recently revised from deficit 498 million to deficit +/- 4 billion dollars budget does this show up?
The bigger question is: How much did Kiewit lower the cost to the taxpayer for this huge reduction in Risk/Cost? Perhaps we’ll never know!
We’ll certainly never know how much the other two proponents would have reduced their price if they had not been required to provide financing!!
Now we’ll get to the part on which my peeve is predicated.
Remember, I said that as well as listing parameters such as length of project and the number of additional lanes required, the Province had also named some gravel resources that the contractor could avail himself of.
One of these was a Provincial owned pit at 248th Avenue in Langley. Access was directly off the freeway. The Contractor could haul excess material (mud, topsoil, deleterious material etc) off the construction site and return with good gravel to build embankments and pavement structure. There were a number of other sources made available, but none offered such convenient access and quality material. Its only natural to assume that all three contractors availed themselves of this resource in preparing and costing the work, as they were entitled to. ( I did a little digging, and found a couple of stories referring to a provincial owned pit in that area, that residents fought against re-opening,for fears of digging harming their well water supply, and generally being a nuisance during the construction of the bridge- LY –http://www.livableregion.ca/blog/blogs/index.php/2009/01/22/aldergrove_council_opposes_gravel_mine_i )
Allegedly, this resource has been withdrawn and I’m told that Kiewit has had to make other plans for wasting excess material and sourcing gravel.
I wonder how much this is adding to the ‘Lump Sum Contract’ under ‘Changed Conditions’? Is it reasonable to expect an explanation?
**Update: The reason there are no tolls on the sea to sky highway, is because there is a hidden toll the government pays on our behalf to the builder, already installed in the contract. Read the entire series here on the Best of page: scroll down to the Sea to Sky Shadow Toll series https://lailayuile.com/best-of/