Posted by: Deirdre Des Jardins | April 1, 2019

WaterFix “Executive Sponsor” and Project Risk Management

Who has been the Senior Planning Manager in charge of the WaterFix Project?  John Bednarski, Metropolitan Water District’s WaterFix project manager, refused to answer the question in the State Water Resources Control Board’s hearing on the project. The answer may lie in an obscure arrangement for a WaterFix project “Executive Sponsor.”

According to information provided to water agencies, the Senior Planning Manager of the WaterFix project has been the president of an obscure company in Idaho called 5RMK. 5RMk provides project planning, estimating and risk management services. The Department of Water Resources chose 5RMK to be the Independent Cost Estimator for the WaterFix Project. But 5RMK has been providing other services as well. According to a powerpoint presentation to the Santa Clara Valley Water District in 2017, 5RMK offers the following services:

· Estimating, scheduling, project planning
· Permitting, siting assessments, environmental compliance
· Program & construction management
· Claims support, [legal] defense & dispute resolution

A resume provided by Patrick Pettiette, the President of 5RMK, to Santa Clara Valley Water District and Metropolitan Water District referred to Pettiette as Executive Sponsor and Senior Planning Manager for the WaterFix Project. An Executive Sponsor usually has the following roles:

· Has ultimate authority and responsibility for a project or program
· Approves changes to scope
· Finds additional funds for scope changes
· Approves deliverables

Pettiette’s Executive Sponsorship of the WaterFix project could thus transfer responsibility and liability for the WaterFix project design to 5RMK from the Department of Water Resources and Metropolitan Water District.  This kind of risk management is a common arrangement for construction of oil and gas pipelines. Pettiette’s resume lists experience as the Executive Sponsor of two natural gas projects built by Exxon/Mobil.

· ExxonMobil – RFE LNG – Eastern Siberia, Russia
· ExxonMobil – PNG/LNG – Papau New Guinea

The Papau New Guinea project has reportedly had disputes stemming from the way the New Guinea government and Exxon proceeded with the project without first resolving landowner claims.

Pettiette’s resume also lists experience as Executive Sponsor, Program Manager, or VP of Operations of high liability United States government projects, including

· US Department of Energy Hanford Nuclear Reservation Closure
· BP/ARCO McColl Superfund Site Restoration
· US Department of Energy Uranium Mill Tailings Remedial Action Project

Hanford

Pettiette was President and Responsible Corporate Officer of a Limited Liability Corporation created for the Hanford Nuclear Reservation Closure, Washington Closure Hanford. According to a report, Hanford Cleanup: The First 25 Years, there were problems with the Hanford Nuclear Reservation Closure Process during Pettiette’s tenure. The report states that “[a] routine audit showed that a worker at Hanford’s Environmental Restoration Disposal Facility (ERDF) falsified records related to the compaction of waste within the disposal site.” It refers to a huge fine:

The U.S. Environmental Protection Agency (EPA), which regulated ERDF, issued the U.S. Department of Energy (DOE) a $1.14 million penalty — its largest fine ever at Hanford. The fine included $835,000 for failure to correctly perform compaction testing. The penalty covered both the falsification of testing records and what EPA believed was the improper use of equipment to test compaction. An additional $305,000 in penalties was assessed because of problems monitoring a system to pump collected water from the landfill. EPA said both DOE and its contractor were at fault.

Pettiette’s resume lists experience with several tunneling projects on his resume, including Construction Management for the Pin Lin Highway Tunnel in Taiwan. Wikipedia states about the tunnel:

While excavating the tunnel, engineers encountered difficult geological problems like fractured rock and massive inflows of water, which caused severe delays. One of the three TBMs on the westbound tunnel was buried by a ground collapse. In order to speed up the tunnel boring, an additional working interface in Interchange Station No. 2 (under Ventilation Shaft No. 2) was built. Along the tunnel alignment, there are six major faults, ninety-eight fracture zones, and thirty six high-pressure groundwater sources. Hence, serious tunnel collapses with groundwater flooding took place periodically during tunnel construction. Altogether, 25 lives were lost during 15 years of construction.

There are very real questions about what the reference in Pettiette’s resume to Executive Sponsorship of the WaterFix project means. These questions could only be answered definitively by the contracts with 5RMK. But the contracts have not been disclosed.

Senator Bill Dodd’s SB 204 would require disclosure of information from future WaterFix contracts. At the Senate Natural Resources Committee hearing on the bill, the State Water Contractors opposed language requiring disclosure of the contracts. At the request of the State Water Contractors, Dodd’s SB 204 has been amended to not require disclosure of contracts worth less than $5 million, and further amendments are being negotiated.


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