This is one engineer's story of how Nalcor "low-balled" the cost estimates for the Muskrat Falls project, paving the way for huge cost overruns. The alleged phony estimates led to an inadequate budget for the project, and indiscriminate contract awards — Astaldi a classic example. The engineer states that Nalcor failed to perform adequate due diligence — ignoring well-established processes designed to confirm valid estimates such as those used by SNC-Lavalin. The post also discusses the implications of those allegations for the integrity of our political process.
Muskrat
Falls — A History of Misinformation — 2010 to 2015
In 2010,
Nalcor hired SNC Lavalin (SNC) to conduct the engineering, procurement and
construction management (EPC) for the MF project. A key aspect of the Company's role —
essential to any decision to proceed — was the preparation of a cost estimate.
The $5
billion investment Premier Williams announced at that time quickly became $6.2
billion ($7.4 billion, including the cost of borrowing) as Nalcor sought
sanction from the Dunderdale Government, in 2012. $6.2 billion was the cost
figure Nalcor used in its Application to the PUB and the claim that the Muskrat
Falls option exceeded the “isolated island” option by $2 billion.
