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Red River Floodway expansion debate flows on

Work under budget but should have cost less: non-union contractors

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The Red River Floodway expansion is finished, but the argument over how it was built continues.

Last month, provincial and federal politicians declared the $665-million project complete and $38 million under budget, but some members of the province's construction industry say it still cost more than it should have.

At the heart of the complaint is the project management agreement (PMA) that imposed union costs even while it didn't restrict the work to unionized companies.

Dave Yallits, of the Manitoba Building & Construction Trades Council, dismissed fears expressed by organizations representing non-union contractors on the project.

Asked if he knew what those organizations would say about the Floodway project management agreement (PMA) today, after about 10 years worth of construction, Yallits said, "Well, they can't say it was ineffective, they can't say it cost more money than it was supposed to, they can't say anyone was forced to join a union."

They may agree with the first and third points Yallits made, but they maintain it cost more than it should have.

Open shop (non-union) construction companies bid on and effectively completed work that increased the capacity of the Floodway from 1,700 cubic metres of water per second to 4,000 cubic metres.

Harvey Miller, the general manager of Merit Contractors Association of Manitoba, an organization of 235 Manitoba construction companies that are non-unionized, maintains some of his companies did not bid on contracts because of conditions the PMA imposed.

They included mandatory union dues as well as employer contributions to health, wellness and pension plans.

"The end result was that you narrowed the competition in some of the projects, and the end result when you narrow competition, we are all aware, is that the price goes up," Miller said.

The official accounting states the project came in $38 million under budget, but Miller and others point out the scale of work was cut back in 2006 when estimates showed it was going to be over budget.

Miller said those additional costs were labour-related and the scope of the work was downsized after the first tenders started coming in at higher than expected prices.

Ernie Gilroy, CEO of the Manitoba Floodway Authority, said that was not the case. He said the project was re-engineered a couple of times for logistical reasons, not because of a fear labour costs would be too high.

"We believe the opposite," Gilroy said. "We believe that in the situation where the contractors all knew what the wages and benefits are and everybody knew what the rules of engagement would be, it made it a lot less risky for the contractors. We think that had a very stabilizing affect on the prices."

Gilroy also disagreed with Miller's contention competition was lessened, citing the fact companies like PCL and Hugh Monro Construction and M.D. Steel Construction, whose president is the chairman of Miller's group, all won major contracts.

The construction project included replacing eight highway and railway bridges and improvements and expansions to other water-control facilities.

Both sides agree the additional costs contractors paid in the form of union dues and additional health, wellness and pension contributions represented less than one per cent of the total cost of the massive construction project.

Whereas Gilroy would say that is a modest cost to pay, Miller believes it was not necessary.

"Those additional costs ought not to have been imposed," Miller said. "If it is public money, all qualified bidders should have the opportunity to bid without any imposed constraints."

He said these kinds of master contract agreements came out of the '60s. Now, he said, most of his members, in order to attract and retain workers, operate in much the same capacity that union shops do.

"All of our members have health and welfare plans that are comparable, if not better, than what unions offer, and we encourage pension plans for our members," he said.

Republished from the Winnipeg Free Press print edition April 26, 2014 B6

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