First batch of fish in the tanks. Half the amount into the K0 tank and 700,000 into K1 in October. A big milestone for the company, but only the coming year will show how mature the long-developed technology truly is.
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A couple of weeks behind the schedule promised for October, but now the small fish have been moved into the first new large K1 pool.
In a couple of weeks, the Q3 review will likely provide more information on the start of fish farming in the K2-K4 schedules. Understandably, there’s no point in rushing fry into the pool if construction work reduces fish comfort and causes more fish deaths.
Currently, the situation in the K0 and K1 pools looks good in terms of biological indicators, but that’s how it should be. We still have to wait over a year until we know more about the development of growth curves and the functionality of the pools (cleanliness, etc.) in the long term.
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The reason for the postponement of the interim report seems to have become clear: the main contractor is being sued, and the claims amount to approximately 100 million euros. Not a small sum at all, but understandable, as the two offerings made this year have gone to cover budget overruns.
The claim, which exceeds NOK 1 billion, reflects previously communicated budget revisions including the NOK 500 million upward revised capex budget announced on 28 May this year as well as earlier communicated changes.
It will be interesting to see how this affects (or if it affects) the construction of the ongoing pools. This lawsuit is not being filed due to a small overbilling, so Andfjord likely has other evidence of the contractor’s negligence than just its own frustration over failed cost control.
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The July sentence was more apt than I could have anticipated. After reading a few news articles, the key points are:
- the relationship between the main contractor (MC) and A has been tense, especially this current year
- the method chosen by the MC was not suitable for building the pools within the timeline and budget set by the MC
- A states that the MC did not inform it early about budget and schedule overruns
- a third-party billing audit found invoices that were not documented or were incorrect - the magnitude of the errors is described as unexpectedly large
- mutual negotiations have not led to a solution, readiness to take the case to court
Although there is also legal support for pursuing the claims, considering the scope of the construction project, it is not easy to prove whether the main contractor acted with clear negligence, and even if so, whether a significant sum of money will be received as compensation after all expenses.
On the other hand, Andjord has had time to collect material supporting its view, and perhaps the clearest example of vague cost control has been the two share issues this year. The issues made in February and again in May show that someone blundered in managing the whole, and it may be difficult for the main contractor to demonstrate why, with the first phase of the project reportedly in the final stretch, costs spiraled out of control and the schedule extended despite this.
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