Millennium Line - Broadway Extension: Planning & Pre-Construction

[WarrenC12]

Originally Posted by officedweller

I'm assuming that the Contractor will be required to take the tunnelling risk (like for Evergreen) - so they would pad their bid to account for the risk of gaps in information.

I suppose the bid could be lower if the Contracor does not take the tunnelling risk, but I can't really see the Province agreeing to that, especially if there's a lot of information, and if other bidders are willing to accept the tunnelling risk.

Sure they will take on some risk, but the final deal will have a bunch of clauses and hundreds of pages of fine print that will end up with Translink or the Province accepting certain risk factors. But the bid will be a hundred million cheaper and impossible not to accept.

Nothing is as simple as "bidder accepts all risk for tunneling".

Case in point with Evergreen: has the public ever seen the financial details of this deal? Any delay will cost money on all sides, as the project teams have to be paid, and any temporary workarounds in place will have to get extended. None of that is free.

[officedweller]

Originally Posted by WarrenC12

Sure they will take on some risk, but the final deal will have a bunch of clauses and hundreds of pages of fine print that will end up with Translink or the Province accepting certain risk factors. But the bid will be a hundred million cheaper and impossible not to accept.

Nothing is as simple as "bidder accepts all risk for tunneling".

Case in point with Evergreen: has the public ever seen the financial details of this deal? Any delay will cost money on all sides, as the project teams have to be paid, and any temporary workarounds in place will have to get extended. None of that is free.

The Contractor accepted the risk of tunnel ground conditions for Evergreen.

That's the Province says they are not on the hook for the costs of tunnelling delays.

That's also the benefit of one big contract for the design build (and partially finance) rather than what Toronto does, which is contract everything piecemeal.


http://www.partnershipsbc.ca/files-4/documents/PBCEvergreen.pdf

[Marshal]

Originally Posted by WarrenC12

I've seen a number of government contracts that end up being "lose/lose" due to low bidding, complicated fine print, and overall disorganization and inexperience of the winning bid proponent.

You just aren't privy to the contractual goals on the industry side: what looks like a loss, may not actually be so. I have seen dozens and dozens of bad contracts in my career, but lose-lose is almost a logical impossibility. Virtually always, someone wins. Lawyers are pretty smart about this and a lose-lose would be a contractual disaster in which a court would nullify the arrangement. Someone always wins in the long term. What's important to realize in that statement is "long term," where contractual obligations and remedies live a longer life than most would understand the contract period to be.

Industry giants are generally singular in their contractual requirements on a project. This means they wield a sharp stick. Governments, on the other hand, are pulled in a number of different directions, all of which they try to get into the scope of their contracts. This means they present a soft belly to the sharp stick . . . governments often sign off on weak contractual arrangements, and are prone to lose to contractors when differences arise. It's the nature of the beast.

Sadly, and this is both pertinent and germane, money is the core of it all, and private concerns are much better focused on money than the government side. Government budgets slide relatively easy, while corporate costs are pinched to the penny. One side is significantly more motivated.

[Marshal]

Originally Posted by officedweller

Thanks for the insight, Marshal!



I'm assuming that the Contractor will be required to take the tunnelling risk (like for Evergreen) - so they would pad their bid to account for the risk of gaps in information.

I suppose the bid could be lower if the Contracor does not take the tunnelling risk, but I can't really see the Province agreeing to that, especially if there's a lot of information, and if other bidders are willing to accept the tunnelling risk.

You are essentially correct. We must always remember the requirements the law sets for contractual validity. Someone, one side or the other, must assume the proper risk, and either way it comes to who feels most comfortable with the nature, scope and potential cost. The bidding concern must build in a contingency if requested/required. But, if not, the government must budget their own contingency amount to cover the same. If neither does, and their is a problem, they both run the risk of a judge cancelling their contract on the basis that there was not equal consideration (value exchange) for the full scope (which includes all contingencies predictable through proper exercise of professional standards) of the project. The judge might then order a payment by one party to remedy the situation according to the judge's standard of fairness. You can imagine the legal cost and time if things ever get to such a point. Both sides would rather keep control and often settle before a judgement. But even better, the lawyers would fight like hell to get a proper arrangement for their respective clients. Typically, the private bidding company has an easier task in formulating this.

[WarrenC12]

Originally Posted by Marshal

You just aren't privy to the contractual goals on the industry side: what looks like a loss, may not actually be so. I have seen dozens and dozens of bad contracts in my career, but lose-lose is almost a logical impossibility. Virtually always, someone wins. Lawyers are pretty smart about this and a lose-lose would be a contractual disaster in which a court would nullify the arrangement. Someone always wins in the long term. What's important to realize in that statement is "long term," where contractual obligations and remedies live a longer life than most would understand the contract period to be.

Thanks Dad but I've seen many of these and other large contracts from both sides. When I say "lose-lose", I mean that the private company is making a lot less profit than they predicted, and the government or other customer also ends up paying more than they expected.

[Marshal]

Oh, so that's what you mean. Thanks for explaining. I'm not your dad (I know, sarcasm), just a professional who has taught construction law at UBC. Believe what makes you happy. Smiles.

[twoNeurons]

I think we can all agree on one thing though... that the more information up front that the client has:

- A smaller soft underbelly is exposed.
- More construction firms will take on the contract (more competition)
- Higher likelihood of meeting budgets, and therefore future projects are easier to approve

Sure, it's about risk, but it's partly just about preparation. Who cares if they find a particularly challenging area. If you prepare for that, it may add 5% to the price of the project.... whereas if you don't prepare for it, it could add 10%, 15% or more.

Say you need a special tunnelling method or machine. It's almost always better to know that from the beginning.

[WarrenC12]

Originally Posted by Marshal

Oh, so that's what you mean. Thanks for explaining. I'm not your dad (I know, sarcasm), just a professional who has taught construction law at UBC. Believe what makes you happy. Smiles.

Trying to "instruct" online can easily come across as making blanket assumptions and being patronizing. Just FYI.

[aberdeen5698]

Originally Posted by WarrenC12

Trying to "instruct" online can easily come across as making blanket assumptions and being patronizing. Just FYI.

Didn't seem that way to me...

[Marshal]

Originally Posted by twoNeurons

I think we can all agree on one thing though... that the more information up front that the client has:

- A smaller soft underbelly is exposed.
- More construction firms will take on the contract (more competition)
- Higher likelihood of meeting budgets, and therefore future projects are easier to approve

Sure, it's about risk, but it's partly just about preparation. Who cares if they find a particularly challenging area. If you prepare for that, it may add 5% to the price of the project.... whereas if you don't prepare for it, it could add 10%, 15% or more.

Say you need a special tunnelling method or machine. It's almost always better to know that from the beginning.

I agree: it comes down to common sense process. Information gathering and structuring is the basis of determining scope and cost - for both good contractual agreement and for the planning and management of the project itself, right through construction. Information is the foundation for every aspect.

[Marshal]

Another poster sent me this message:

I'd point to the Seymour Capilano Twin Tunnels as a lose-lose for both parties.
Bilfinger Berger is no longer a construction company, and the Government had to wait several additional years for the completion of their contract.

Yes, I know it and you are correct. A very difficult one in that the crux problem that brought them down was a geology that was completely unknowable in the typical sense. While they entered in good faith, they had no capacity to absorb the conditions they found deep under that mountain. These things do happen.

What I think I said to WarrenC12 is that this kind of situation is quite rare under the normal circumstances of most infrastructure projects; circumstances in which the needed information is accessible. It is not a situation that should be offered as an example of what typically transpires within the industry as a whole. Lose-lose is a relative rarity that happens due to a cluster of either incompetence or an overwhelmed management that has no mechanism to tell itself that that is the case. Contracts do include parts based on risk of the unknown. For those clauses to fail spells legal incompetence more than anything else.

The Capilano water tunnels are a different situation altogether. That failure was of the company's complete inability to perform the principle work. They met conditions no one could have predicted, and the prior discovery of which was prohibitively expense.

But, even here, "lose-lose" doesn't really fit. The government didn't really lose, they lost their working budget and ended up paying for what they would have had to pay for anyway. For them, the final cost, less the costs of disruption, was the true cost that they could have never avoided if they wanted the project done. They eventually did get their project, they paid for it, and paid for the delay/disruption as their part of the original risk. At worst, a messy win-lose example.

[Marshal]

I have just been told that the original contractor's bid was unreasonably lower than the rest - a sign that they were not functioning with enough information (concerning either their own capacity or a misunderstanding of the required work). They paid the price.

[jollyburger]

They were drilling in that city owned lot (?) on the south east corner of Main/Broadway today.

[Jebby]

Originally Posted by jollyburger

They were drilling in that city owned lot (?) on the south east corner of Main/Broadway today.

Is that lot expected to be used for a station?

[officedweller]

Hopefully, that location makes the most sense.

[jollyburger]

Originally Posted by Jebby

Is that lot expected to be used for a station?

I think that's what someone mentioned a few weeks ago and being city-owned it makes sense.

[Reecemartin]

[Deleted]

[twoNeurons]

Originally Posted by Reecemartin

So exciting to see the project coming along, I just hope the extension to UBC isn't like the extension to Surrey Langley where it's plannee and then doesn't come to fruition

To be fair, I don't think the Surrey to Langley extension was ever actually planned per say... it was just kind of an idea that many felt may happen because King George Station points down Fraser Highway.

This is partly why Surrey went ahead with the LRT plans, because it knew that waiting for SkyTrain would take decades as it waited in line behind the Broadway extension.... and then likely the UBC extension... and then who knows... maybe a Hastings Line or double-tracking of the Richmond portion of the Canada Line... or a line to the North Shore...

The Millennium Line West was on the drawing board when the NDP was in power as a Phase II of that line.

[Meraki]

Originally Posted by Reecemartin

So exciting to see the project coming along, I just hope the extension to UBC isn't like the extension to Surrey Langley where it's plannee and then doesn't come to fruition

LRT from Arbutus to UBC.

[Bdawe]

Originally Posted by twoNeurons

To be fair, I don't think the Surrey to Langley extension was ever actually planned per say... it was just kind of an idea that many felt may happen because King George Station points down Fraser Highway.

This is partly why Surrey went ahead with the LRT plans, because it knew that waiting for SkyTrain would take decades as it waited in line behind the Broadway extension.... and then likely the UBC extension... and then who knows... maybe a Hastings Line or double-tracking of the Richmond portion of the Canada Line... or a line to the North Shore...

The Millennium Line West was on the drawing board when the NDP was in power as a Phase II of that line.

I don't really see why that has to be. After all, there is no Hastings or Richmond or North Shore Rapid Transit Study. There's Broadway & Surrey, and Surrey's got projects lined up that no one other than vancouver also has.

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