Partly built North Shore sewage treatment plant cost balloons to $3.9 billion

Early 2024 construction progress on the North Shore Wastewater Treatment Plant. (Metro Vancouver Regional District)

The newly updated cost of building the partially built North Shore Wastewater Treatment Plant has exponentially escalated into becoming one of the most expensive infrastructure projects in the Metro Vancouver region.

Metro Vancouver Regional District provided media with an update on the project’s status today, announcing the beleaguered and delayed project is now expected to cost $3.86 billion to complete — a jump of more than five times from the original estimate.

The new budget has been publicly revealed following a decision earlier today by Metro Vancouver’s board of directors to green-light the revised project.

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This $3.86 billion cost is now comparable to the cost of the provincial government’s future projects of building the $4 billion Surrey-Langley SkyTrain or the $4.15 new replacement George Massey Tunnel. It will also be the regional district’s largest project to date.

The newly revised cost for the new sewage treatment plant on the North Shore is up from the budget of $700 million when major construction work first began in 2018, based on the initial schedule for a 2020 completion.

In 2021, the budget had already increased to $1.058 billion. The previous major construction activities came to an official halt in October 2021, and the regional district formally terminated its contract with Acciona Infrastructure Canada in 2022. Just prior to Acciona’s departure from the project, the timeline for completion had already been shifted to 2023.

Acciona completed 80% of the plant’s design and 30% of its construction, with only half of the 2.8 million cubic feet of concrete poured to date.

In 2022, the regional district contracted PCL Construction as the new construction manager, and AECOM as the new project designer. Under the new contractors, the project is expected to be substantially complete in 2030, with minor connecting works in subsequent years — pushing the completion timeline by a decade.

The plant’s construction site is a 7.6-acre former industrial site, previously a rail yard for BC Rail, near the waterfront within District of North Vancouver — just north of Seaspan’s main shipyards hub. The site is framed by West 1st Street to the north, Pemberton Avenue to the east, Phillip Avenue to the west, and railways to the south.

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Early 2024 construction progress on the North Shore Wastewater Treatment Plant. (Metro Vancouver Regional District)

This new facility will specifically provide the sewage treatment needs for the District of West Vancouver, District of North Vancouver, City of North Vancouver, and the First Nations reserves on the North Shore.

Ratepayers on the North Shore will cover the bulk of the $3.86 billion cost of the project; the average North Shore household impact is expected to be $725.00 per household over the 30-year amortization period.

This is double the typical 15-year runway for the amortization period of regional district projects, but it was a request made by the municipal governments to spread out the impact to households over a longer period.

All other ratepayers across Metro Vancouver will see an increase, too, over the same period. Households in the Vancouver sewerage area will see an average $140.99 increase, the Lulu Island West sewerage area will see $70.00, and the Fraser sewerage area will see $80.00.

Vancouver, University of British Columbia, University Endowment Lands, and parts of western Burnaby are within the Vancouver sewerage area; western Richmond is within the Lulu Island West sewerage area; eastern Richmond, most of Burnaby, Delta, New Westminster, Coquitlam, Port Moody, Port Coquitlam, Pitt Meadows, Maple Ridge, Surrey, White Rock, and Langley are within the Fraser sewerage area.

Map of the North Shore Wastewater Treatment Plant project locations and components. (Metro Vancouver Regional District)

The federal and provincial governments provided $405 million in joint funding for the project in 2017. They have yet to announce any additional funding to help cover the new budget.

“We are acutely aware of concerns around how this cost may impact the property taxes and utility rates of residents on the North Shore in particular,” said Jerry Dobrovolny, the commissioner and chief administrative officer of Metro Vancouver Regional District, today.

“We are working on a long-term financial plan to better illustrate to the provincial and federal governments why our region needs financial support to deliver infrastructure projects such as these.”

Dobrovolny says he is confident that there will be no further cost escalation, based on separate cost estimates made by three independent third party teams over the past year, including one estimate by PCL.

Under the original contract, Acciona was responsible for the design and construction of the project.

Acciona is also the main contractor for current major construction projects such as SkyTrain’s Millennium Line Broadway Extension, the new Pattullo Bridge, and the Site C hydroelectric dam.

According to the regional district, there were major challenges with Acciona’s quality of work, timeline, schedule, and price.

When it comes to quality, PCL, the replacement contractor, found about 1,500 serious concrete deficiencies in the work to date, including exposed rebar and air gaps. All of these deficiencies have now been repaired by PCL.

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Example of concrete construction deficiencies for the North Shore Wastewater Treatment Plant. (Metro Vancouver Regional District)

The regional district asserts that based on the findings of their new construction and design contractors, there are many conflicts in Acciona’s design that do not work, and construction and design progress is far less than what they were told.

Dobrovolny says the regional district’s litigation with Acciona is expected to go on for many years. Acciona is also countersuing, and claims it is owed $100 million for unpaid work.

Part of the cost escalation from the original $700 million budget comes from the regional district’s 2019 stop work and change order, requesting Acciona to change the design of the plant in the middle of construction to add the third level of sewage treatment — tertiary treatment.

Tertiary treatment removes 99% of the solids in the water, while primary treatment filters out 60% and secondary treatment removes 93%. The inclusion of tertiary treatment comes with additional complex equipment and machinery.

The original project’s design provided secondary treatment, which is an upgrade from the existing aging North Shore sewage treatment plant’s capability of primary treatment. Under new federal regulations enacted in 2012, there is a minimum requirement of secondary treatment for Canada’s sewage treatment plants, with a deadline of 2030 to meet such standards for existing facilities.

Additionally, the sewage heat captured by the new plant will be used to help power the new district energy system in Lonsdale.

2024 artistic rendering of the revised design for North Shore Wastewater Treatment Plant. (Metro Vancouver Regional District)

As well, the new plant provides added capacity to handle demand through the year 2100 — enough to handle 300,000 residents on the North Shore, up from the sewerage area’s existing population of about 200,000.

The existing Lions Gate Wastewater Treatment Plant is located on the North Shore waterfront to the west of the north end of the Lions Gate Bridge. Upon the completion of the new plant, the existing plant will be decommissioned, and the site will be rehabilitated before its ownership is transferred to the Squamish First Nation.

The new plant will reuse the existing treated water outfall pipe located next to the Lions Gate Bridge. It was noted today that the new First Narrows pump station under the bridge and the conveyance system between the pump station and the new plant are now complete, with this portion of the project finished on time and on budget.

Other major cost escalation factors described by the regional district include the steep inflation of the cost for construction materials, equipment, and labour as a result of the pandemic, and the added cost of labour in terms of their transportation to the work site, as many labourers live south of Burrard Inlet — as far away as the South of Fraser.

Completion of the the North Shore Wastewater Plant’s conveyance pump station at the First Narrows under the Lions Gate Bridge. The existing Lions Gate Wastewater Treatment Plant, which will be decommissioned, is also depicted in the background. (Metro Vancouver Regional District)

Prior to today’s final decision to proceed with the project with a revised budget, an analysis confirmed that the project site, including an evaluation of its soil conditions, is still the best location for the plant — where over $600 million in on-site construction works have already been spent.

Dobrovolny also noted that following the challenges with the North Shore plant, the regional district has created a new dedicated team to provide further oversight over their various capital projects.

There are currently a total of five sewage treatment plants owned and operated by the regional district across Metro Vancouver, with each sewerage area catchment separate from the other areas.

In addition to the new North Shore plant, the regional district is building a $1.3 billion expansion of the Northwest Langley Wastewater Treatment Plant in Langley Township, set for completion in 2030.

The regional district has also begun site preparation work for its new replacement and expanded Iona Wastewater Treatment Plant just northwest of Vancouver International Airport. This project, which serves the Vancouver sewerage area, has also faced critical attention for its cost of over $10 billion, with Vancouver sewerage area ratepayers set to cover the bulk of this cost.

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