Wednesday, 26 March 2014

WHY MUSKRAT “OVERSIGHT” COMMITTEE IS A FARCE

When Premier Tom Marshall announced his Administration’s intention to establish an “Oversight” Committee for the Muskrat Falls construction project skepticism abounded. 

Afterall, the Premier eschewed demands for project reviews when he was both Minister of Finance and Natural Resources. He supported Premier Dunderdale’s position on ‘oversight’ even as he watched his colleague, Jerome Kennedy, bolt the Cabinet over the issue.

With Dunderdale gone, it was natural to wonder whether it was really possible that Premier Marshall, now possessed of the power to arbitrarily cause a reversal of policy, might actually do so.

It was left to the Natural Resources Minister Derrick Dally to announce the details of Government’s plan.  He confirmed was most suspected.  

The Oversight Committee will be completely internal to the Government and consist of the Deputy Ministers of Finance, Natural Resources and Justice and Chaired by the Clerk of the Executive Council. The Minister says the Committee will focus on project costs, scheduling and overall performance.

The Minister failed to comment on the independence the Committee might exert.  The subject is moot, anyway, given the Government’s failure to get serious about the issue of oversight and a determination to provide for an informed and professional analysis of Nalcor’s management capability.

With all due respect to the noted senior public servants, they do not possess the skills to assess all the issues essential to providing credible oversight of a multi-billion dollar construction Project.

Undoubtedly, as senior officials, they have a role to play; chiefly, it is one that entails co-ordination of the Oversight Committee and communicating the analysis of a properly constituted expert group to the Premier and Cabinet. 

In the absence of significant technical expertise, especially in the engineering, project management and financial fields, this Committee is incapable of giving Government either independent thought or serious review.

There is no nice way to say this: the Premier is being dishonest.  He is attempting to mislead an uninformed public once again.

No one, including this Blogger, expected the oversight committee to be possessed with the authority to re-consider the assumptions on which Muskrat is based, however unsound. Equally, however, no one would have thought a chastened Government capable of reducing ‘oversight’ to a three martini lunch with Nalcor CEO Ed Martin on a Friday afternoon.  That is what the Premier has essentially done.

What might real oversight actually look like?

First, it will conduct review of Nalcor’s Muskrat Falls engineering and financial models and the assumptions on which they are based; an information base, updated constantly, would be analyzed until project completion. 

It will demand an analysis to determine whether construction progress, to date, mirrors Nalcor’s engineering and design criteria, accounts for forecast technical issues and reflects forecast targets in tendering prices and budgets. 

It will assess the Project schedule and determine if progress is consistent with forecasts.
It will review critical project milestones and assess impediments to their achievement.  For this purpose, it will review what engineers refer to as the Company’s critical issues log (Risk Log) which describes possible or anticipated major technical challenges. (One such issue would be the North Spur’s Quick Clay stability problem and many less tricky and costly issues that emerged during the design process.)  

An Oversight Committee would conduct an assessment of the current management expertise to determine if some of Nalcor’s cable and oil management guys should be switched out with real hydro dam construction expertise especially considering that Muskrat is actually a damn project with management issues peculiar to that construction.  

The Committee would review legal issues that have arisen with contractors regarding legal drafting and interpretation of tenders. It would review legal agreements entered into with various parties including the Native Peoples. 

It would determine whether the Government’s legal commitments are whole, obviating the possibly of lawsuits and more costs later.

It will note the construction change orders that have already been issued and why they needed to occur. 

Then there would be sub-sets of these issues; all focussed on getting a complex project executed on time and on budget.

No one should be left with the impression that four career senior public servants, each heading major departments of Government, none knowing much, if anything, about a mega construction project or possessing engineering expertise, can undertake the role of oversight of Muskrat Falls.  

Who would even think that four people, working part-time, could perform that which only a dedicated expert team, intelligently assembled, could possibly undertake? 

Oversight needs a mandate supported by an honest Government preoccupied with the enormous challenges of Muskrat Falls and the serious threat of overruns from poor project conception, management and political influence.  It needs a budget and a team of experienced professionals, at least some of them with international expertise on several hydro projects.  It needs independence.

The Premier has offered nothing of the kind. 

That such a Committee should be inscribed with the title “oversight” is inherently dishonest and unbecoming of a Premier but perhaps not this Premier.

He has proven again why he should not be trusted.


Nalcor is solely in charge.  There is no oversight of Muskrat Falls.

6 comments:

  1. The issue of oversight on Muskrat Falls is blown out of porportion. It is too late. There is no backing out on this decision. The dam will be built.

    What it is not too late for is judgement on the decisions made by Nalcor and this government.

    To help the population reach a evidence based decision we need to understand what will this project cost. Release the schedule performance. Release the updated cost estimes. Released the earned value calculations. Give the public the information to the public, and let those who are paying for this project decided if it was worthwhile.

    Despite Ed Martin telling the people of the province that updated cost estimates would be provided Q1/Q2 of 2014, they now will not be released until July at the earliest. After the PC leadership convention.

    Which is unfortunate. The wake of Muskrat Falls will be the biggest politicial issue for the new premier. I for one would like the PC leaders to debate the project, with all the facts in the public domain.

    These delays are unacceptable, and purely political. It is Bull Shit, and there should be riots in the streets.

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  2. This oversight committee is but one more flagrant attempt by a secretive and dishonest government to make themselves smell a little better. They are only fooling themselves while continuing to try to fool the people of NL. It is a shameful and power-drunk decision by a government that is devoid of basic principles of good governance. They are not worthy of any support in 2015….. given their outright incompetence in managing the oil revenues collected since 2005….. and their deceitful efforts to obscure the real reasons for this monstrous financial debacle called Muskrat Falls.

    Everything they do from here on in will only drive the financial nail deeper into the mountain of debt now gathering and one that will become an even more insurmountable financial mountain of debt. It will grow each year as they throw away the province's revenues on a tiny dam with a colossal debt.

    It is even more disheartening to see every politician in the province capitulating to the insidious idea that it cannot be stopped. Yes….it can be stopped even now….but will go ahead because the Opposition have given up the fight…and so have many of the people of the province. Stopping it would cost billions but forging ahead will cost untold billions. History will judge us and them for the complacency we have shown.

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  3. The great and shameful irony in Muskrat Falls is that it is being advanced by a Tory government that, despite a glorious opportunity to advance transparency and integrity in review, is acting more clandestinely Smallwoodian than Smallwood himself.

    If democracy has one great fault, it is that individuals are elected and appointed to positions of significant power and are granted the legal capacity to develop and implement policies for which they have little or no expertise. Some elected officials recognize their limitations and seek out expertise, while others--convinced and driven by their own hubris--forge ahead alone. The result is disasters that financially leverage countless generations. Sadly, without appropriate oversight, Muskrat Falls appears destined to financially hobble the province once again and this troubles me greatly.




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