In mid-October 2021, Metro Vancouver terminated its contract with Acciona for construction of a waste water treatment plant in North Vancouver. The partially built project was originally planned to be complete by 2020 and its price tag had soared beyond $1 billion from the original budget of $700 million. Acciona called the cancellation regrettable and unnecessary.
Metro Vancouver’s action came weeks after it was reported that Accionna appeared to have abandoned work on the site:
An international construction company building the $1-billion wastewater treatment plant in North Vancouver has all but “abandoned” the project, according to Metro Vancouver.
“It appears to Metro Vancouver that Acciona has abandoned the project,” Jerry Dobrovolny, Metro Vancouver’s commissioner and chief administrative officer, said by email.
“Given they are years behind schedule for this project, we had expected them to be increasing their efforts on site, not reducing them.”
[Contractor] AWS is part of Acciona, a Spanish multinational based near Madrid that specializes in building infrastructure and renewable energy.
More than two years before, North Vancouver District issued a temporary stop-work order on the project because Acciona was not complying with building code requirements.
Acciona is part of Peace River Hydro Partners, which was awarded a $1.75 billion contract for civil works at Site C.
Although the Site C project is delayed and over budget, and at least four years from completion, BC Hydro’s FIA reports indicate PRHP has already been paid $2.5 billion. The overall budget has doubled so it is a safe guess to assume that Acciona’s take will be far more than the amount originally contracted.
This was predictable.
Underestimation cannot be explained by error and is best explained by strategic misrepresentation, that is, lying. The policy implications are clear: legislators, administrators, investors, media representatives, and members of the public who value honest numbers should not trust cost estimates and cost-benefit analyses produced by project promoters and their analysts.
The global megaproject market is estimated at US$ 6–9 trillion per year, or approximately 8% of total global gross domestic product. Flyvbjerg discusses his ‘megaprojects paradox’, where, on one side of the paradox, megaprojects as a delivery model for public and private ventures have never been more in demand, and the size and frequency of megaprojects have never been larger. On the other side, performance in megaproject management is strikingly poor and has not improved for the 90-year period for which comparable data are available...
Somewhat amusingly, the book examines ‘the four sublimes’ that drive megaproject management, including technological, policital, economic and aesthetic ‘rapture’. In something readers will immediately recognise, the book points out that ‘Front-end planning is [usually] rushed and deficient, bad projects are not stopped, implementation phases and delays are long, costs soar, and benefits and revenue realisation diminishes and recedes into the future.’. In the case of megaprojects, ‘all you do when you hit the ground running, is fall.’
Acciona ranks with SNC-Lavalin as a favoured contractor for public projects in British Columbia government. The Spanish company is now contracted for other BC megaprojects, including the $2 billion(↑) Broadway subway and the $1 billion(↑) Pattullo Bridge. The chance of those projects being delivered on-time and on-budget can be safely established at zero.
One is left to wonder why senior public officials do repeat business with global companies that have a history of delivering not on-time and not on-budget.
Perhaps there are reasons not immediately apparent to the public.
In 2013, the World Bank banned SNC-Lavalin and its subsidiaries because of bribery schemes involving the company. In 2019, the World Bank found “Acciona engaged in corrupt, collusive, and fraudulent conduct” to secure a contract to supervise World Bank-financed infrastructure projects.
A Business in Vancouver (BIV) article shows why multi-billion boondoggles matter to everyone. Utility fees charged by local governments extract cash directly from the accounts of local businesses and residents, whether homeowners or renters.
Categories: Budget & Estimate Disasters