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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
