Binding arbitration needed for Spadina subway dispute: OGCA

Dailycommercialnews.com
May 8, 2015
By Richard Gilbert

The Ontario General Contractors Association's (OGCA) president is calling for binding arbitration to resolve a construction dispute on the Spadina subway extension, which involves contractor claims against the project caused by two years of delays.

"To me, the best way to resolve these claims and disputes, that have arisen prior to Bechtel taking over, is to refer them to binding arbitration, and take them right out of Bechtel's responsibility," said Clive Thurston.

"All of the claims that have existed up to know, that have been working their way through and are at certain levels, need to be taken to mediation or binding arbitration."

The Toronto Transit Commission (TTC) recently signed an $80 million contract with Bechtel Canada Inc. for project management of the Toronto-York Spadina Subway Extension (TYSSE) project. TTC CEO Andy Byford is implementing a project reset plan which strips control of the project from TTC's internal management team and hands it over to a third-party manager using a sole-source contract.

One of the first steps Bechtel is taking to get construction back on track is to deal with contractor claims against the project.

"The TTC has hired a new project manager that will be assisted by specialized claims experts," said Kelly Rowe, policy advisor, office of the TTC chair in an e-mail. "These experts will be tasked with driving down the cost of claims as well as negotiating the withdrawal of some of them. Once that process is finalized, by the end of the year, we will have a better understanding of the claims cost."

In response, contractors argue they are not responsible for the failure of the project to meet the initial completion deadlines in 2015 and 2016.

"In our opinion, it wasn't our fault what happened and people should have taken steps long ago to correct it, but didn't take those steps, so I see no reason why any OGCA member would be willing to take a loss," said Thurston. "If the city or anybody else believes that, then they can get ready for some litigation that is going to cost a lot of money and delay things."

As part of the reset plan, Byford fired the TTC's chief capital officer and chief project manager, in an attempt to restore public confidence. These firings seem to indicate that Byford had identified poor management as an important cause of construction delays.

Byford's plan instructs Bechtel to develop a process and timeline to resolve outstanding contractor claims. This process aims to change the adversarial relationship between project management and contractors, by establishing a collaborative environment.

Thurston is skeptical about the TTC's approach to dispute resolution on a project that is already experiencing major delays and cost overruns.

From the OGCA's perspective, Bechtel is going to have their hands full running the project and should not be saddled with a dispute that they did not create and are already on the table.

However, binding arbitration would allow all of the claims to be consolidated and referred to a board of experts, who would deal with them as quickly as possible.

For the OGCA, this is the most reasonable solution to the dispute, because it allows work to continue immediately, if both sides agree to accept the board's decisions.

"Bechtel needs to get busy fixing the job and getting it on track," said Thurston.

"If they have to get tied up in all these lawsuits, delay claims and arguments going on, that is just going to cause problems and be unsuccessful."

When Toronto city council approved Byford's reset plan on March 31, the budget jumped by $150 million, which increased the current estimated construction cost to $2.8 billion. However, this estimate does not include the cost of contractor claims.

Bechtel is expected to deal with contractor claims and complete construction of the project by Dec. 31, 2017.

Initially, the cost of the 6.2 km extension in Toronto was estimated to be $1.5 billion.

But, this increased to $2.1 billion in 2006 when the extension was expanded by 2.4 km to Vaughan in York Region.