Taking measure of a massive infrastructure investment

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By Art Maw
Special to Canadian Design and Construction Report

A quantity surveyor speaks to the cost consultant’s role in the P3 projects
coming from Trudeau’s $125 billion infrastructure promise.

We are well into the first year of Justin Trudeau’s new Liberal government, one that has promised a $125 billion investment into infrastructure over the next 10 years. It’s too soon yet to see any concrete results of that pledge, but already plans are underway and I expect many of them to hit the market for bidding in 2017. It’s an exciting time for the country, and also a time when quantity surveyors will play a role to ensure Canada keeps its reputation for financial judiciousness.

Quantity surveyors – the cost consultants for the construction industry – will play a crucial role over these next ten years to make sure that this massive investment is responsibly managed. These professionals are relied upon at all levels – federal, provincial, and municipal – and trusted because we are the building industry’s “honest broker.”

When it comes to infrastructure projects, in the past several years, we have seen an increase in use of the public-private partnership (P3) model, and I believe that will continue for much of the federal developments to come over the next decade. Canada has in fact been a global leader of this type of infrastructure financing. In the P3 model private companies are responsible for the initial funds for development and take on more of the financial risk, which results in public infrastructure projects being initiated and completed within a shorter timeframe. And because quantity surveyors work with both the public and private aspects of P3 projects – and don’t build or invest in anything themselves – it is especially true in this case that they will be the responsible “honest broker” to help fulfill the current vision for Canada.

For P3 projects, the quantity surveyors working with the government side of the project are consulted to figure out what the budget should be. At a high level, this means examining the environmental assessment and engineering and design documents to assess the full range of costs, including the physical construction work; soft costs such as design, consulting, and financing; and social costs, which are the economic impact of projects on things like a population’s health. In the P3 environment, the other thing a quantity surveyor must factor in is the concession period during which the private investor agrees to maintain and operate whatever is being built. These building lifecycle costs can run up to 30 years. All of these considerations then go into building the tender document to create a workable and accurate framework for bids from the private side of the P3 equation. A body at the federal, provincial, or municipal level may want to repair an asset or build a new one, but until a quantity surveyor gets involved, the value of the project is unknown.

Of course, once that value is determined by a quantity surveyor, the government body may need to lower the scope due to current budgets, while leaving the door open to completing the project later. Breaking a project down into phases that are independently functional is thus going to be a crucial activity for the upcoming infrastructure projects. We saw an example of this in Ottawa, when the LRT project needed to be broken down into two economically feasible parts. The first phase, which focused on serving the core, is currently underway and phase two, which is now being developed, will extend the line further out into the suburbs. The value of the entire project was around $5 billion, but the initial budget wouldn’t have allowed it to be built at one time.

The quantity surveyor’s work for the private sector of the P3 equation is the mirror of the role for the public sector – we help the consortiums develop the bids that fit within the framework provided by the government. Of course, some conditions may change during the process. The recent drop in the Canadian dollar, for instance, means that materials that are exclusively sourced in the U.S.—stainless steel and structural steel sections, for instance—are going to eat up more of the budget. Either alternative materials will need to be located, or else other parts of the budget will need to be trimmed in order to accommodate the higher cost.

The Canadian Institute of Quantity Surveyors – the professional association that oversees the Professional Quantity Surveyor designation – was formed in 1959. It wasn’t too long after that that we saw the last infrastructure spend on the scale of what Trudeau has promised. This major commitment by the federal government is more than welcome, and I speak for all my quantity surveying peers when I say that we are excited to play our role in this infrastructure renewal.

Art Maw, a Professional Quantity Surveyor (PQS) designated by the Canadian Institute of Quantity Surveyors, is president of Hanscomb Limited.

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