Water authority wins $35 million judgment for early third intake trouble

It took four years and a lengthy legal fight, but the Southern Nevada Water Authority has won an insurance judgment that covers the cost of early problems on its $817 million third intake project at Lake Mead.

Authority board members on were briefed on the $35 million judgment Thursday. An arbitration panel handed down the award on Jan. 23 following more than two years of depositions, document exchanges and deliberations.

“We’ve pretty much recouped our losses, so we’re happy,” said Marc Jensen, the authority’s director of engineering.

A series of floods in a chamber 600 feet underground in 2010 set construction back more than a year and prompted the authority board to add $39.5 million to the project’s budget, the largest such change order in the agency’s history.

The $35 million the project’s insurance carrier was ordered to pay is on top of $14.2 million already paid out on the authority’s claim.

Jensen said that basically covers the cost of the 2011 change order, legal costs and interest payments the authority lost out on.

The third intake project involves carving a tunnel 20 feet tall and three miles long to draw water from one of the deepest spots in Lake Mead. It is designed to keep water flowing to the Las Vegas Valley even if the reservoir shrinks low enough to shut down one of the two existing intakes that deliver about 90 percent of the community’s water supply.

A $25 million tunnel-boring machine specially built for the job is now grinding its way through rock under the lake bed. So far, the machine has excavated about 8,500 feet of tunnel with another 6,500 feet to go.

“Right now, the ground is very good,” Jensen said.

The third intake has been called one of the world’s most complex and risky tunnel jobs, and it has already seen its share of problems.

Some equipment was lost during the 2010 floods, which filled the tunnel with water and debris and forced general contractor Vegas Tunnel Constructors to abandon the site and dig in a new direction. That led to the change order in 2011 and a 593-day extension of the completion date.

Then on June 11, 2012, a worker was killed in an accident underground.

Since then, unexpectedly difficult rock conditions have slowed progress of the boring machine and prompted two lengthy maintenance stops.

In November, the water authority board granted Vegas Tunnel Constructors a second time extension, this time 13 months, pushing the completion date to July 4, 2015.

Barring any more major setbacks, Jensen said he expects the contractor to meet the new date or “maybe even beat it a little.”

But more trouble waits just around the corner.

Sometime this summer, the tunnelling machine should reach the next bad patch of fractured rock as it approaches and then crosses about 50 feet under the old Las Vegas Wash channel, now at the bottom of Lake Mead.

Contact reporter Henry Brean at hbrean@reviewjournal.com or 702-383-0350. Follow him on Twitter at @RefriedBrean.