Thursday, 21 February 2019


When journalists interview Ed Martin, as CBC’s Terry Roberts did a few days ago, it is right to wonder if they go away laughing. 

Unfortunately, the reporter’s interview with Martin is found only on the CBC website, so images of him uproariously slapping his sides can only be imagined.

Terry Robert’s story is about Ed Martin dissing Astaldi. Martin thinks that the Company is “largely to blame for the massive cost and schedule overruns” experienced on the Muskrat Falls project.

The context, of course, is the just-released Grant Thornton Report, a Forensic Audit prepared for the Construction Phase of the Muskrat Falls Inquiry. The Audit informs us that, within the first four months following project sanction, Martin had already blown through the low-balled contingency allowance, having issued contracts which exceeded the project estimate by 25% ($600 million). 

Included in the figure is the Astaldi contract which was 31% over Nalcor's budget. The $1.1 billion award to the Italian firm eventually saw the cost balloon to $1.959 billion as of March 28, 2018: nearly $900 million over the bid price. Nalcor and Astaldi are now in arbitration talks over claims amounting to several hundred million dollars more.

The fact that they had no experience working in the sub-Arctic conditions of Labrador didn't even earn the publicly-owned corporation a frown. 

Martin took not a clue from having received bids from two Canadian companies whose prices were almost double that of Astaldi.  Nalcor's own labour estimate was lower than Astaldi's by over 3 million hours. In fact, all the labour estimates exceeded Nalcor's, according to Grant Thornton, by an amount ranging from “60% to 160%.” Experienced Managers would have thrown out the ridiculously low Astaldi bid; the outfit more familiar with flies than frostbite. 

But the Astaldi bid served as cover for a "Base Estimate" ill-conceived and so Astaldi was selected with foreseen consequences.

Nalcor watched Astaldi struggle for nearly a year trying to ramp up, giving it cash advances to stay afloat. Yes, the Company was stupid, but as much as Martin? 

Reporters Should Remember the Ones Who Lie

The project Schedule only had a 3% chance of success prior to Sanction. When the Astaldi contract was awarded, after Sanction, it was already six months behind schedule. Nalcor's failure to re-calculate the project — ignoring the cascading effect on sub-contractors — was a very costly error. But that is only a small part of what makes Ed Martin's CBC interview, placing all the blame on Astaldi, laughable.

There's also the ill-fated “Dome”, upon which Astaldi relied to achieve planned productivity. The ICS, or integrated cover system, was supposed to “allow the workers to work comfortably… during the winter season resulting in no loss of labour productivity due to the climate.”

Nalcor, in evaluating the Astaldi bid, didn't as much as consider if the Dome made sense. Williams Engineering, a Consultant to Grant Thornton, noted that with so much combined activity expected to occur under the enclosure, it “warranted detailed scrutiny.”

Knowing that Astaldi and the Muskrat Falls project were failing badly, Ed Martin gave reporters a project update on June 26, 2014 in which he pushed project costs to $6.99 billion. He also stated with characteristic bravado: “We're well within a comfortable envelope of where we expected to be… I believe that we have narrowed down the risk of additional cost increases very, very, very significantly.

In contrast to Martin's assertions, the Forensic Audit confirms that, when he engaged in that interview in 2014, the Nalcor Executive knew that the actual forecast to complete the project was $7.5 billion not $6.99 billion. Martin knew, too, that the costs were going far higher (p. 19).
Martin failed to tell reporters - and hence, the public - that the contingency had been blown months earlier.  He even went so far as tell them that the project was on schedule to be completed in 2017, when he knew that any such prospect had no chance at all. 

Martin should have stayed away from megaprojects and joined the comedy business.  

Except that comedians usually know when they’re not being taken seriously.