RE:RE:RE:Key messaging during the Q3 call The 528 million is the estimated cost to complete (regardless of whether our claims are paid) of the 4 LSTKs and represents less than 10% of the backlog of 6.2B and less than 5% of the backlog when you add the three awarded contracts that were not yet added to the 6.2B pulling it to over 12B (Go Expansion OnCorr, Scarborough Subway Extension and the 2 Darlington SMRs).
The cost to complete the 4 LSTKs is based on the amount of direct labor, materials and equipment operation and depreciation costs and indirect costs. There is no profit added. This is the cost to finish the job, regardless of how much we settle our claims for.
The settlement money for the 3 LSTKs will reflect not in the cost to complete but in the receivables and only if there are no conditions attached such as completing something before a certain date.
The CEO below is saying that Finch is really done so no material backlog or risks there, that Eglinton and REM are also close to complete and will be delivered this year. Clearly most of the backlog is from Gordie Howe which we know, as a few days ago, that it has been settled.
What I don't know if whether the Gordie Howe settlement is included in the 3 settled LSTKs. I think it is but management could not mention it during the Q3 call because it was probably conditional to some approval level or had to be kept confidential per the contract agreement.
What we do know now is that the Gordie Howe Bridge consortium will have no liquidity damages to pay for being delayed because of the 10-months extension that puts it at September 30, 2025. If we are delayed beyond September 2025 then yes we will need to demonstrate that there was an unforeseen cause (or pay if any) but things appear to roll nicely on the bridge.
REM is not to worry in my opinion because the Caisse is in a difficult legal position being the prime shareholder of Atkins and its prime client. Plus its role was/is to save Atkins from being taken over and dismantled. A key shareholder (not the Caisse) confirmed to me that Aecon is the porte-parole for the Atkins claims with the Caisse.
Q3 JLS
You know, on those four projects one has reached mechanical completion. The three are the ones, I mean two will be completed in 2024 and we are really nearing completion and the other one around 2025. It just means that this will steadily decrease in the two to three quarters to come.
On other hand, let's maybe come back a little on the situation of those legacy projects. You have noted, we reached three major settlement agreements on three of these projects. Those contract drill negotiation are extremely complex with a lot of parameters. But what is important is that they allow to have a much better clarity on schedule to completion and eventual attached liquidity damages. They allow to have additional revenue and much more clarity and the way it's going to be distributed I mean the cash associated with it. And Dave spoke about it. I mean we are favored in those agreements, a quick disposal of the cash from our client. And then it gives us a better knowledge of the cost to come.
On the last one, you remember, we have reached mechanical completion and we were protected from early 2023 in terms of cash because our costs were covered on those one. So to come back to your risk question, cash is preserved on those jobs for the quarters to come and it is important.