‘Above board’ — Gordie Howe Bridge CEO defends higher costs, delays

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Even with the most recent $700-million spike in cost, the head of the Gordie Howe International Bridge project says it remains a bargain.

Windsor-Detroit Bridge Authority (WDBA) CEO Charl van Niekerk told The Windsor Star that the new $6.4-billion price tag to build the international span is still less than the runner-up tender in the original process eight years ago.

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But he said he can’t divulge the amount of that second-best offer.

And while the cost increase comes with a 10-month delay, he said there has been progress. The bridge decks stretching out from the Canadian and U.S. sides will connect over the Detroit River this summer.

Van Niekerk said the re-negotiated contract also contains new penalties if the contractor — a consortium of companies called Bridging North America (BNA) — misses the new 2025 deadline.

The WDBA said the initial runner-up bid from 2016 is “commercially confidential” and can’t be revealed, even though some details of the winning contract are public.

“We’re still at a better price than the second-best bid on the job, from the beginning,” van Niekerk told the Star in an exclusive interview.

“It’s still a good deal. But more than that, if you look at the impacts the contractor had on the project, we truly believe it’s all above-board. None of these projects are truly fixed-price. None of them are truly fixed schedule.”

“The fixed price relates to the scope that you transfer to the contractor and the risk. In our case, very specifically, it was not a transferred risk. It’s a shared risk. You look therefore at the costs to manage those aspects, and it was fair.”

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The WDBA, which oversees the project for the Canadian government, announced in January that the cost of building the bridge would increase from $5.7 billion to $6.4 billion. The federal government, which is financing the entire project and will recoup the costs through future bridge tolls, is taking on the extra $700 million cost.

The bridge authority also revealed the bridge’s opening date was being pushed back by close to a year. It was previously set for November 2024. The new target is to finish construction in September 2025, with the first vehicles anticipated to cross that fall.

In an interview with the Star last week, federal Conservative Leader Pierre Poilivere criticized the Liberal government for the delay and additional cost, suggesting taxpayer money was being wasted.

Given the circumstances, van Niekerk said the bridge team is happy the delay was “limited to only 10 months beyond the original contracted completion date.

“With safety as our top priority, we will continue to work together to deliver this much-needed infrastructure to the thousands of eager travellers ready to cross North America’s longest cable-stayed bridge,” he said.

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Bridging North America and WDBA blame COVID-19 for the delay and cost escalation.

Van Niekerk said the global pandemic presented a range of issues such as supply chain delivery problems and the need for social distancing. Having 10 people working in a space where there were previously 50 slowed things down, he said.

“Struggling to get people to site. You have to have social distancing. Supply chain impacts. Cost escalations — you name it, COVID triggered it. It’s a difficult time and it’s impressive that the contractor was able to mitigate it.

“You must remember it’s not just COVID, per se, as you find in the rest of the province. But here you’re dealing with regulations on both sides of the border, which are different.

“The U.S. and Canada had a totally different approach to how you handle COVID, and our contractor had to deal with all those different aspects.”

But there were also several disputes between WDBA and Bridging North America that bogged down the process.

After obtaining an analyst’s report, the Star revealed in 2022 that completion of the bridge would likely be delayed until at least August 2025, partly due to those disputes.

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The report from S&P Global Ratings, issued around the end of summer 2022, stated there were 40 supervening event notices and 11 formal disputes that had been referred to a standing committee up to that point.

One of the biggest trouble spots causing delays was design completion and “siphon works” issues related to the new interchange connecting bridge traffic to the I-75 freeway in Detroit.

The report stated the contractor believed the siphon designs provided by WDBA were not completed. Some powerline and utility relocation issues also caused delays, the report stated.

Van Niekerk, who was not CEO when those disputes arose, would not go into detail about them.

“What I can tell you is, as part of our mid-project settlement, all of that has been resolved,” said van Niekerk, who left Infrastructure Ontario to join WDBA last July. “So basically all issues before December 2022 are now a clean state and we’re moving forward from there.”

While agreeing those disputes did contribute to delays, he said he couldn’t break down how big of a factor they were.

“On all big projects it’s very convoluted in terms of how these aspects play into each other and impact the time extension you require to make it reasonable for the contractor,” said van Niekerk.

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“Then, of course, the cost impacts. It was part of a global claim. So when you evaluate the claim or the potential settlement of the contract, you look at all of these aspects together.

“And you look at what’s a reasonable extension of time to get the contract back to where they were before these impacts happened.”

The original contract did have bank penalties for the contractors if they missed deadlines for something that was their fault.

But van Niekerk said it did not include any penalties that WDBA or the government could impose. There were no “specific liquidated damages for being late,” he said.

“It’s like a typical big project on a fixed cost basis,” said van Niekerk, who previously oversaw construction of the province’s Herb Gray Parkway in Windsor as executive vice-president with Infrastructure Ontario.

“They carry the risk for the contract. So if there is additional overages because the contract extends because of what they’ve done, they carry the risks. They carry the additional interest rate costs.

“But there were no other additional penalties on the original contract.”

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That has changed. Van Niekerk said that, going forward, there are new liquidated damages clauses requiring BNA to make payments to the bridge authority if key milestones are not achieved on time. The details of those damages are also “confidential,” WDBA said.

“We actually negotiated to put that in now as part of the mid-contract settlement,” said van Niekerk.

Since the idea for a new international crossing was conceived more than two decades ago, delays have been an ongoing theme.

Planning for the government-backed bridge began in 2001, with a targeted completion date in 2011.

But politics, government foot-dragging, and lawsuits  — primarily from the Ambassador Bridge’s late billionaire owner Matty Moroun — held up the process for years.

In July 2015, the procurement process finally began with a request for qualifications. Six contractor groups initially applied to build the bridge. At the time, governments estimated the cost of building a new bridge was around $2.1 billion.

That same year, the future bridge was officially named after Gordie Howe, the Canadian hockey player and Detroit Red Wings legend.

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The WDBA revealed in January 2016 it had narrowed the applicants down to a shortlist of three: Legacy Link Partners, CanAm Gateway Partners, and Bridging North America.

Those groups were asked in November 2016 to submit formal proposals, which included fixed prices and schedules.

The bridge authority announced its preferred proponent on July 5, 2018 — Bridging North America, comprised of ACS Infrastructure Canada Inc., Fluor Canada Ltd. and Aecon Concessions.

On Sept. 28 of that year, the two groups announced they had signed a fixed-price contract worth $5.7 billion.

The ceremonial ground-breaking finally came on July 17, 2018, with a hoped-for completion date by late 2022 or early 2023.

After several milestones, estimated dates, and deadlines have come and gone, van Niekerk said the end is in sight for what the WDBA calls “a once-in-a-generation undertaking.”

“At the moment you can see the buildings being built, you can see the bridge towers going up,” he said, pointing to the various structures seen from the parking lot of the WDBA Windsor offices.

“The most exciting part is that gap closing. We’ve got about 200 metres to go between the two bridge decks. We expect that gap to be closed middle of summer.”

twilhelm@postmedia.com

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