While the Quebec government recognizes that the price of $2.75 billion for the replacement of the Île d’Orléans bridge “may make you jump,” one of its engineers points out that this is, among other things, due to a new method of awarding contracts that costs have exploded.
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“It’s like you’re renovating your kitchen,” explains the president of the Professional Association of Government Engineers of Quebec (APIGQ), Marc-André Martin. You have the choice of paying by the hour for the work carried out and risking overruns, or you pay a flat rate, therefore a fixed amount, and it is the contractor who assumes all potential cost overruns and inconveniences. »
In 2014, the Quebec government spoke of an amount of $400 million for the construction of a new bridge on the island with the so-called “traditional” calculation method, therefore without taking into account cost overruns. In the meantime, the system for awarding contracts has been revised and it is now the fixed price formula (design-build) which is used in major infrastructure projects, according to Mr. Martin.
“The consortium must itself provide the necessary reserves in the event of cost overruns, shortages of materials, technical problems, etc. We give the keys to the entrepreneur and it is he who will have to assume all the risks once the contract is signed.
By having awarded a design-build contract, the government is “totally subcontracting” the construction of the work which must be delivered by 2028. The president of the APIGQ, however, recalls that the Groupe Héritage Île-d consortium Orléans will have to respect deadlines and pre-established specifications, otherwise it will have to pay “megapenalties”.
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Disaster scenario
Marc-André Martin estimates that a “good portion” of the $1.856 billion bid will be used to manage the risks associated with the project. According to him, they are particularly numerous in the case of a bridge.
“There are lots of imponderables to take into account. It could be the increase in the cost of materials, the quality of the floors, the design flaws. And all of this, the entrepreneur must plan for in his budget, because he must find financing himself before obtaining the contract. You have to plan for the worst-case scenario, just in case.”
What happens if, in the end, the megaproject goes exactly as planned without any major hitch? “The surplus goes directly into the pockets of the builder because they are already budgeted in the estimate,” notes the experienced engineer.
He explains that once the agreement is initialed, after a rigorous call for tenders and analysis process, the government “cannot even set foot on the site without prior authorization.”
“We have no say in quality control after the contract has been awarded. It is the contractor who decides, for example, which bolt to use where in the structure without anyone having a say,” he concludes.