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
16 www.lexpert.ca Feature "There has been a huge increase in interest in [collaborative procurement models]" "The commodity prices at the moment – across the board – have just gone bonkers" Ilan Dunsky DENTONS Jamie Templeton STIKEMAN ELLIOTT LLP "ere's a huge labour shortage," says Hiller, who practises law related to capital projects, construction and infrastructure, procurement, and service delivery. "We have a lot of retirements, which also means that the level of seniority in these projects is dropping in age." She says that lawyers are looking at alli- ance and progressive design-build models to adapt to a not-so-hot market with fewer bidders. She adds that the tight labour market and declining seniority on projects are just some of the factors creating delays. ere has also been an increase in COVID-delay claims; steel supply is depleted, partly due to the war in Ukraine; and there are increased costs and notices of delay due to climate change. "We had those floods in BC last summer. We've had fires," says Hiller. "Sounds very biblical, but it all causes quite a bit of delay. Climate change is becoming a real issue for projects in BC." She says delays and labour shortages increase costs for contractors, who then bid accordingly. Procuring authorities are dealing with a market that cannot handle all the projects on offer, says Platteel. Contractors are chal- lenging procuring authorities to change the procurement model, he says. "ere are very few contractors who can handle some of the big projects, particularly in the social infrastructure space, but also in the transit space." "Procuring authorities are, frankly, needing to be responsive to some of these contractor and developer demands to move to a more progressive model," says Platteel. "Because they are otherwise finding them- selves with not enough bidders, or bidders dropping out." In David Little's 25-year practice, he has seen trends similar to those occurring now – occasional spikes in inflation, labour short- ages in various parts of the country – but now, the "pace of change is so high," he says. Little is a partner at Bennett Jones, whose practice focuses on construction and infra- structure, procurement, P3s, development, and service delivery. "We've got the pandemic. We've got supply-chain disruption. We've got the impact of climate change, like floods.… Now the costs are so unpredictable and clearly rising," Little says. How do we take infrastructure procurement – a long process – and match it up with things changing in a much shorter timeframe? e infrastructure market was already contending with commodity prices, infla- tion, supply-chain issues and COVID, and the war in Ukraine exacerbated those prob- lems, says Jamie Templeton, partner and co-head of the projects and infrastructure group at Stikeman Elliott LLP. On COVID, he and his colleagues have negotiated supervening event relief struc- tures with the various provinces. ose are easy to implement, he says, "essentially, you're just looking for extra time-relief for your contractors and the lenders that are supporting these contractors." "But the supply-chain one is a trickier one because it's not just time." Erratic commodity prices continue to create "huge issues" for projects when consortiums are under fixed- price, date-certain contracts. It is difficult for contractors to hedge some of the exposure from commodities such as steel. "e commodity prices at the moment – across the board – have just gone bonkers," he says. On the other hand, adds Templeton, soaring commodity prices and the war in Ukraine may also contain a silver lining for Canadian liquid natural gas production. "It's clear that Europe, finally, its hand's been forced in its need to turn away from Russia as a main importer of LNG." is development raises the question of whether Canada will look to develop LNG projects on the east coast to export the gas to Europe, he says. As Jean Patrick Dallaire, a construction lawyer at Langlois Lawyers LLP, remarks, "e technological breakthroughs, the envi- ronmental crisis, the pandemic, the war in Europe, and the cyber-attacks on our soil remind us of the extent to which recent events are highly likely to transform our lifestyles, our values and, incidentally, our priorities in infrastructure."