Acciona sues Metro Vancouver for $250 million over North Shore plant

Company argues that delays and cost overruns were due largely to a poor site and flaws in Metro Vancouver’s own design.

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Responsibility for delays and cost overruns on construction of Metro Vancouver’s now $1-billion North Shore wastewater treatment plant will be decided by the courts.

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Metro’s original contractor, Spanish construction giant Acciona, filed a $250-million lawsuit in BC Supreme Court on Thursday. Acciona alleges it was wrongfully terminated from the project by Metro Vancouver, which is now working with a new contractor to complete the facility

Acciona was selected in 2017 to design a $504 million secondary-treatment plant for 250,000 households on the North Shore.

As construction got underway, Acciona alleges in its 98-page notice of claim, Metro “repeatedly and wrongfully conducted itself in the design review process,” set out in the contract and argues that most of the delays and cost increases were caused by problems with Metro Vancouver’s own design.

In 2019, Metro and Acciona agreed to a 2½-year extension and a budget increase to $621 million. But, Acciona alleged, by mid-2021 it was clear the project could not be built on the site selected by Metro without significant changes, including to its deadline.

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Metro’s chief administrative officer, Jerry Dobrovolny, said Thursday the regional district “is confident that its decision to terminate was justified.”

“Metro Vancouver will defend against Acciona’s claims, including the unfounded allegations of misconduct,” Dobrovolny said in a statement.

Acciona’s allegations have not been proven in court and Metro Vancouver has not filed a response.

In the statement, Dobrovolny said, Metro Vancouver agreed to Acciona’s revisions to the contract allowing more time to build the treatment plant, along with an increased budget and a deadline extension.

“Metro Vancouver continued to act reasonably and uphold the terms of the contract, including making all payments due in a timely fashion,” Dobrovolny said.

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However, it was Acciona that missed key construction milestones, he alleged, and it “became apparent in 2021 that Acciona was unable to meet its obligations under its contract with Metro Vancouver.”

Metro terminated the contract in January.

In February, Metro hired PCL Constructors West Coast Inc. on a $40-million contract to come up with a plan for restarting construction that has consumed $498 million so far.

In its claim, Acciona alleviates the project was beset by problems that started with Metro’s selection of the former BC Rail passenger-station lands, which was too small to accommodate the intended facilities and subject to natural hazards including seismic risk and sea-level rise.

And in the process of construction, Acciona discovered “rampant errors and conflicts in (Metro Vancouver’s) design and construction specifications,” the claim alleges.

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“The delay to the target acceptance date and the increased costs to complete the project were caused by the project site being unsuitable,” the lawsuit alleges, and “the wrongful conduct” of Metro Vancouver in not approving changes to the design, schedule and budget as needed.

The company contends that it was participating in “good-faith” discussions to resolve issues with the project last summer and fall at the time Metro said Acciona had appeared to have abandoned the project.

“In fact, at all material times, Acciona’s updated project schedule, as required … provided an accurate and realistic representation of Acciona’s plan to complete its obligations,” the claim contends, adding termination of the agreement was wrongful.

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Acciona is seeking at least $250 million, including a $100-million payment for work already performed that Metro withheld last fall and $50 million from Acciona’s design-build security and other damages such as a diminished reputation following the wrongful termination and loss of opportunity.

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