Lexpert magazine features articles and columns on developments in legal practice management, deals and lawsuits of interest in Canada, the law and business issues of interest to legal professionals and businesses that purchase legal services.
Issue link: https://digital.carswellmedia.com/i/1470131
14 www.lexpert.ca NEW PROCUREMENT MODELS AND COST UNCERTAINTY WHILE NEW PROCUREMENT MODELS GAIN TRACTION IN LARGE INFRASTRUCTURE PROJECTS, UNPREDICTABLE COSTS CONTINUE TO BESET THE MARKET Feature and back out of the market. It has caused what I call a culture of dispute, where there are significant disputes on major public infrastructure projects on both the transit side and the social infrastructure side." In the last five years, these concerns among contractors and developers about overpricing and assuming risk have led to an interest in new procurement models, says Platteel, a member of Gowling's real estate and financial services department and the infrastructure and construction industry group. Two of the new procuring models appearing on the Canadian infrastruc- ture scene are the alliance model and the progressive design-build model, also known as collaborative models. "ere has been a huge increase in interest in those," says Ilan Dunsky, partner at Dentons and national co-chair of the firm's infrastructure and public-private partnership group. While only a handful of such proj- ects have been tendered so far, he says some of Canada's most significant projects are inviting bids under a collaborative model. ese include Metrolinx's and Infrastructure Ontario's GO Transit Regional Express Rail, a significant portion of which was tendered collaboratively. e $562-million enhancement to Union Station in Toronto, scheduled for completion in fall 2025, was planned via the alliance model. e federal government is also working on a high-frequency rail line to run from Toronto to Quebec City via Ottawa and Montreal, which they are tendering according to a collaborative model. "at's a trend that we'll probably see continue, especially for projects that are as large in scope and cost as rail development projects, whether that's subways or regional rail networks," says Christine Ferguson, counsel at Borden Ladner Gervais LLP in Toronto, whose practice focuses on devel- oping and financing of infrastructure projects. "CLIMATE CHANGE IS BECOMING A REAL ISSUE FOR PROJECTS IN BC" Joe McArthur BLAKE CASSELS & GRAYDON LLP NEW, COLLABORATIVE procurement models have been gaining appeal in Canadian infrastructure in recent years. At the same time, the market continues to grapple with uncertainties, from labour shortages, COVID-related delays, and vola- tile commodity prices to supply-chain issues. Historically, infrastructure procurement in public-private partnerships (P3s) has involved fixed prices and fixed schedules, says Mark Platteel, partner at Gowling WLG. Bidders commit early in a competitive procurement. He says they commit before they know about third-party and land-site risk or before they have design development at an advanced stage or engage with permit issuers. "at's caused challenges in the market. It's caused some contractors to lose money