LUNENBURG, N.S. -- The delayed and over-budget Bluenose II restoration project reached a crucial milestone Tuesday when a project manager showed off a newly completed hydraulic steering system that had been the source of many woes.

The original restoration plans called for a wooden rudder, like that of the first Bluenose, but safety regulators at the American Bureau of Shipping later called for upgrades that led to design changes, including installation of a heavier steel rudder.

Consultant Wilson Fitt was called in to fix the steering in June after it was revealed the schooner's three-tonne rudder was too heavy to turn manually.

"The loads in the new rudder system were just too great to allow anybody other than Hercules and his first cousin to make this steering gear work," he said.

Fitt demonstrated the ship's custom, power-assisted steering as the Bluenose II was moored at the waterfront in Lunenburg, not far from where the ship underwent a major rebuild that started in 2009.

"It works exactly as it is intended to work," he said, spinning the ship's wheel. "(But) it was a real challenge."

Fitt, the head of Costello Fitt Ltd., said that except for some cosmetic woodwork, the steering system has been completed and the province's sailing ambassador should be ready for sea trials in May -- three years behind its original schedule.

He declined to comment on how much it cost to build the new system or what the final cost for the restoration will be.

Earlier this year, government officials confirmed the project is $5 million over budget, with total costs expected to top $19 million.

As for safety, naval architect Iain Tulloch said the steel rudder is a major improvement over the original design, which was prone to damage.

Tulloch said that if the ship's electrical system fails, the 300-tonne vessel can still be steered with little effort because a manual hydraulic pump has been installed to handle the load.

"This is much stronger with more backup systems than a wooden rudder ever had," Tulloch said.

In September, the senior bureaucrat overseeing the project, David Darrow, concluded that the wrong government department was put in charge of the project in 2009.

Darrow, the premier's deputy minister, said the Department of Culture and Heritage didn't have the expertise to manage such a complex project. He said the Transportation Department should have been given the job.

In January, Premier Stephen McNeil said the restoration had become such a mess that he called it a "boondoggle." He then asked the province's auditor general to investigate.

The 43-metre Bluenose II, launched in 1963, is a replica of the original Bluenose, the 1921 Grand Banks fishing schooner that won worldwide acclaim for its graceful lines and speed.