{"id":282114,"date":"2022-12-09T04:00:45","date_gmt":"2022-12-09T09:00:45","guid":{"rendered":"https:\/\/canada.constructconnect.com\/?p=282114"},"modified":"2022-12-09T13:11:06","modified_gmt":"2022-12-09T18:11:06","slug":"p3s-face-up-to-vuca-volatility-uncertainty-complexity-ambiguity","status":"publish","type":"post","link":"https:\/\/canada.constructconnect.com\/dcn\/news\/associations\/2022\/12\/p3s-face-up-to-vuca-volatility-uncertainty-complexity-ambiguity","title":{"rendered":"P3s face up to VUCA \u2013 volatility, uncertainty, complexity, ambiguity"},"content":{"rendered":"
Three high-profile panellists addressing a recent P3 conference audience found some prospects to be positive about as they documented gloomy conditions hamstringing the marketplace.<\/p>\n
Panel moderator Mark Bain, outgoing chair of the Canadian Council for Public-Private Partnerships (CCPPP), hosted a session billed as The Search for Canada\u2019s Nation Building Mojo: Can We Still Build Big? on the first day of the CCPPP conference held in Toronto last month.<\/p>\n
He asked the panellists to future prospects through the lens of two current business acronyms: are they EGAP, which is the World Bank\u2019s acronym for everything goes according to plan, or VUCA, standing for volatility, uncertainty, complexity and ambiguity?<\/p>\n
\u201cAt Metrolinx we rarely use that acronym,\u201d joked Metrolinx CEO and president Phil Verster about EGAP. His firm\u2019s struggles in getting the Toronto Eglinton Crosstown LRT project to the finish line have been much in the news recently.<\/p>\n
\u201cNothing of what we\u2019re seeing is normal. How likely did we think it was ever going to be that at CEO level meetings we will talk about availability of cement?<\/p>\n
\u201cCommodities that we\u2019ve taken for granted ain\u2019t taken for granted anymore.\u201d<\/p>\n
Supply chain challenges continue, he said, there is the war in Ukraine, and COVID restrictions in China have had huge impacts.<\/p>\n
\u201cSometimes small items have big consequences. The world is in upheaval,\u201d Verster said.<\/p>\n
<\/p>\n
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1\/3<\/h4>\n DON WALL \u2014 Metrolinx CEO Phil Verster said during the recent CCPPP conference, \u201cOne of the concerns I have is really whether we have in our local industry, enough leadership, enough skills to actually deliver the scale of the programs.\u201d \n<\/figcaption>\n\t<\/figure>\n <\/article>\n \n \n\t\t\n\t\t\t\n
2\/3<\/h4>\n DON WALL \u2014 Sam Chai, president of Kiewit Development, was one of three panellists discussing the future of big projects at the recent CCPPP conference in Toronto.\n<\/figcaption>\n\t<\/figure>\n <\/article>\n \n \n\t\t\n\t\t\t\n
3\/3<\/h4>\n DON WALL \u2014 CCPPP conference panellist Sharon Telem, managing director of Debt Capital Markets, Scotiabank, said investors would like to see more P3 supply.\n<\/figcaption>\n\t<\/figure>\n <\/article>\n <\/div>\n\n
<\/p>\n
The other panellists were Sam Chai, president of Kiewit Development, and Sharon Telem, managing director of Debt Capital Markets, Scotiabank.<\/p>\n
Together they outlined such challenges as more projects being outright cancelled; a flip in the P3 market with demand overtaking supply, so there is ample private and public capital being injected but problems resourcing the projects, causing inflationary pressures; and the impossibility of forecasting costs just a few years ahead, let alone a decade ahead.<\/p>\n
As well, the panellists addressed the rise in the value of megaprojects, which forces firms to join forces.<\/p>\n
Limiting competition and the number of bids; the lack of leadership and experience in top executive positions; and the increase in enterprise risk, where one problematic job can take down an entire company.<\/p>\n
In the early days of P3s, Chai said, mentioning the Atlantic Confederation Bridge project, much effort was spent trying to find ways to harness the power of the P3 model, with owners, contractors, operators and finance doing their best to understand how to create benefits.<\/p>\n
\u201cI think if we can get back to that spirit of partnership, that third \u2018P,\u2019 and really collaborate meaningfully, I think we will be really surprised what we can do going forward,\u201d said Chai.<\/p>\n
Verster said understanding the true nature of risks and dealing with risk allocation is more important than ever. He said the Alliance project delivery model being used with the Toronto Union Station project is taking partnerships to a new level. Collaboration is harnessing the skills of Kiewit, Alberici, WSP Canada and MEC, Verster said.<\/p>\n
\u201cThese models can actually help you to deliver better,\u201d he said, adding, \u201cEvery model has got its challenges and that\u2019s what we need to adapt to.\u201d<\/p>\n
From the perspective of financing, Telem said, \u201cThere\u2019s a lot to celebrate.\u201d<\/p>\n
Post-COVID, with a possible recession looming, P3 deals are still getting done.<\/p>\n
\u201cP3 models are working, with people that are supposed to be taking the risk taking the risk, and it\u2019s a resilient model that makes sense,\u201d said Telem.<\/p>\n
\u201cInvestors would like to see more P3 supply. And I\u2019m not at all concerned that we\u2019re running out of demand at this rate.\u201d<\/p>\n
Asked later by Bain what types of large P3 projects would be favoured in the future, all three panellists included public transit.<\/p>\n
Chai said he supported projects promoting connectivity. Better broadband would connect all Canadians including those in the remote North, where new all-season roads should include broadband infrastructure.<\/p>\n
P3s should also address transit, transportation and logistics needs as well, he said: \u201cI think there\u2019s a huge opportunity around air cargo and seaports as well.\u201d<\/p>\n
Telem said her clients believe projects should address two goals: criticality, and the level of ESG commitment.<\/p>\n
Criticality involves everyone including government being committed to getting the project done.<\/p>\n
\u201cThey want to know that governments are going to do what it takes to get it to completion and ultimately we\u2019ll get paid,\u201d said Telem.<\/p>\n
Verster said spending on transit proves its value when considered through economic benefit-cost analysis and also social impact.<\/p>\n
\u201cYou think of transit, transit is about how communities are starting to live,\u201d he said. \u201cIt\u2019s part of the fabric of how our community operates. We\u2019ve had these big projects in developed cities, there\u2019s a huge impact on the local community.\u201d<\/p>\n
Good transit will last 100 years, Verster said.<\/p>\n
\u201cYou probably need to ask a slightly different question: what\u2019s the cost of not doing stuff?\u201d he said.<\/p>\n
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