AUGUST 2018

INFRASTRUCTURE REPORT 2018 FEDS RAMP UP SPENDING

www.on-sitemag.com PM #40065710 PICKING UP THE PACE

Canada’s infrastructure plan starts hitting its stride

BY DAVID KENNEDY

t may have been a little slow off scale jobs worth as little as a few thousand the flow of funds, Ottawa has made the proverbial mark, but the fed- dollars, to megaprojects with price tags substantial progress over the past few eral government’s $180 billion running into the billions. By 2028, the months. Of the $14.4 billion promised infrastructure plan is now off and Investing in Canada Plan is expected to under the first phase of the plan, 88 per running. have doled out more than $180 billion, cent has been tied to specific projects that As of August 2018, the split nearly evenly between investments are either underway or complete – up from federal government has approved in new programs and funding for existing 70 per cent in April. The larger, second funding for thousands of projects federal initiatives. tranche of $81 billion in new spending, across the country – from small- Though some concerns remain about which Ottawa announced in Budget 2017, I22 / AUGUST 2018 2018 INFRASTRUCTURE REPORT

TAKING DELAYS IN STRIDE Despite the progress, there have been slow downs along the way. “Our partners asked that we design programs that are flexible and responsive to their needs,” says former Infrastructure Minister Amarjeet Sohi, who was swapped off the infrastructure file in a mid-July cabinet shuffle. “And we have done just that – extending the deadlines under some of our programs and adjusting our fore- casts under new programs to ensure that funding is available to their projects when they need it.” One of the largest of these adjustments came this spring in Budget 2018. While Ottawa did not alter the $180 billion figure promised a year earlier, it pushed back billions in spending until the tail end of the 12-year plan. The result is the slower rollout of funds between 2018 and 2024, but higher spending between 2025 and 2028. Backloading the budget delays an average of $441.6 million in spending in each of the next seven fiscal years when compared to the original plan. So, while spending is still expected to ramp up, it won’t be until 2025 that Ottawa truly opens the spigot. With the spring changes factored in, $36.1 billion – or 44.5 per cent of total new program spending – is earmarked for the final three fiscal years of the plan, bad news for contractors looking to secure new contracts today. Mary Van Buren, the president of the Canadian Construction Association, acknowledged that there’s been “some slippage” in the flow of funds, but says as has also begun to leave federal coffers. structure and transit lines through bilateral long as the infrastructure dollars remain 14 federal departments and agencies, agreements with each province and terri- on the federal books, it’s not cause for including Infrastructure Canada, Transport tory is likely the highest-stake initiative. concern. Canada and Natural Resources Canada are Ottawa has struck deals to unlock this “The fact that there have been some responsible for developing and overseeing funding with 10 of the 13 jurisdictions, delays is not great, but some of it is under- the new spending programs. up from seven in April. Only agreements standable,” she says, pointing to some For contractors, Infrastructure Cana- with Saskatchewan, Newfoundland and municipal governments with projects that da’s $33 billion allotment that will pay for Labrador and Prince Edward Island remain weren’t shovel-ready and capacity issues projects such as highways, water infra- unsigned. within the construction industry itself. on-sitemag.com / 23 START IT UP.

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NEW INFRASTRUCTURE SPENDING BY PROVINCE AND TERRITORY $497 M $617 M $622 M $630 M

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$760 M $947 M

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BUSINESS PURR. The $180 BILLION 44.5% Ottawa has inked infrastructure deals with You want an engine that has a reputation plan consists of more than $90 billion in of the federal funding is earmarked for 10 OF 13 both new and existing spending initiatives 2025-2028 Canadian provinces and territories for doing everything right so your product can do what it’s designed to do. In other words, you want a Kubota. “Municipalities are working hard to will reach construction firms through tried could begin making investments next year. get their funding requests in and there’s and true methods, such as provincial Though later than initially hoped, the THE ENGINE OF SUCCESS no shortage of work that needs to be done. and municipal contracts or public private novel investment vehicle has been allotted Canada has very aging infrastructure – it’s partnerships (P3s). But there’s at least one some $35 billion over the next decade to very old. Whether that’s sewers or roads or wildcard in Ottawa’s infrastructure deck. help lure private investors into the public bridges, these are important investments The much-touted Canada Infra- works business. Far from chump change, that need to be made,” she says, adding structure Bank, an institution set up to the government dollars and potential for that the CCA is working with governments foster private sector interest in financing, private profits could alter the infrastructure and industry groups at both the local and building and operating major infrastruc- landscape, and greatly benefit builders in national level to help ensure any future ture, could coax a new breed of investors the process. Learn more at KubotaEngine.com/Success funding problems are smoothed out and into what’s traditionally been government Lavallée says he believes the bank will projects get underway. territory. be good for contractors. “Our intent is not Pierre Lavallée, who started work as to replace the successful P3 model,” he P3S GO “A STEP FURTHER” the CIB’s new president and CEO in June, says. “We will be a new option for funding Much of the federal infrastructure cash says the arms-length government body infrastructure projects that might other- on-sitemag.com / 25

OnSite_April_KubotaEngines.indd 1 2018-04-04 10:38 AM A rendering of Kingston, Ont.’s Third Crossing bridge. The new $180 million span is one of thousands of projects to receive federal funding. PHOTO CITY OF KINGSTON wise not get built.” partners. trade action from the Trump administration “P3 arrangements typically include While most projects are expected to and some steep challenges within our own payments from the government when an focus on Canada, at least one U.S. state is borders, many major building projects asset becomes available – this model actively exploring using the new Canadian will be pressured in both the short- and transfers construction and operating risk to institution to its own advantage. A report long-term. private parties. The bank will use a co-in- prepared for the Washington State Depart- In the coming months, Van Buren vestment model that takes the involvement ment of Transportation released earlier this expects the U.S. steel tariffs to inflict of the private sector a step further to year says the CIB could provide a “key” “some pain” on the construction industry, assume risks relating to usage or revenue. source of funding for an ultra high-speed but if time drags on with no resolution, The bank’s co-investment can mitigate rail line connecting Vancouver, Seattle and she anticipates a “real impact” on the some of the usage and revenue risks for Portland. industry. private-sector and institutional investors, The potential project, and others like “Our hope is of course that this is a or ‘inject’ capital at key points, making it, would likely require close cooperation short-term tactic on the U.S. side,” Van projects more attractive.” between Canada and its southern neigh- Buren says. “The jury’s still out on that, The bank’s mandate encompasses bour. Given the current climate, this seems but we remain optimistic that the Cana- revenue-generating projects that are in the far from guaranteed. dian government... will come to a positive public interest and at least partly within solution for Canada and the Americans are Canada. It expects to focus on public UPHILL BATTLES interested in doing that as well.” transit, trade and transportation as well as Uncertainty for Canadian infrastructure According to the Canadian Coalition green energy projects. projects extends beyond the untested for Construction Steel, Canadian manu- Lavallée would not comment on Canada Infrastructure Bank. facturers produce only half the steel the specific projects, but says the bank has With fresh tariffs on steel and alumi- Canadian construction industry consumes. received several “promising proposals” num crossing the Canada-U.S. border, The sector relies on the U.S. for about a that it’s currently working on with its seemingly weekly threats of further hostile quarter of its total demand. With tariffs

BIG TICKET PROJECTS TO RECEIVE FEDERAL FUNDING Project Estimated total value Calgary Green Line Light Rail Transit Project $4.6 billion Ottawa Light Rail Transit (LRT) Stage 2 $3.0 billion Finch West Light Rail Transit Project $2.5 billion Southwest Calgary Ring Road Project $2.2 billion PHOTO INFRASTRUCTURE ONTARIO GO Transit RER - Kitchener Corridor $1.5 billion A rendering of the soon-to-be-built Finch West Light Rail Transit Project. AS OF AUGUST 2018

26 / AUGUST 2018 2018 INFRASTRUCTURE REPORT

increasing prices for buyers, budgets for a project to expand the pipeline, which infrastructure projects will need to keep appeared increasingly uncertain due to pace. In other words, $180 billion will not opposition. go as far as it used to. While both West Coast projects seem Van Buren says the higher prices could to be back on course, projects to build also cause problems for contractors that energy infrastructure like dams and pipe- The newly-formed Canada have entered into contracts with certain lines face stronger opposition than ever. Infrastructure Bank has assumptions about material prices. The Still, so long as the work moves forward, CCA is already working on mitigation contractors with expertise in the energy $35 BILLION should the international trade turmoil sector are poised for a busy few years as to invest over the next 10 years continue. firms upgrade aging pipelines and build Even within Canada, numerous road- new routes to export Canadian oil and gas. blocks threaten several big-ticket infra- Along with the construction ramp-up More than structure projects. on Trans Mountain, major pipeline opera- The Site C hydro project in British tors Enbridge Inc. and TransCanada Corp.

PHOTO CITY OF KINGSTON 30% Columbia, for instance, was recently put have committed billions to upgrading their of Ottawa’s infrastructure spending will go through the wringer by its own govern- systems within Canada over the next few toward public transportation projects ment. It barely escaped cancellation, years. Meanwhile, a consortium of energy despite more than two years of construc- heavyweights, including Shell, Petro- tion. Several months later, the federal nas and PetroChina are inching toward government spent $4.5 billion to purchase green-lighting a $40 billion project to the Trans Mountain Pipeline from Kinder build a liquefied natural gas export termi- Morgan Canada Ltd. The deal safeguarded nal in Kitimat, B.C.

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Closing the loop

Builders of Calgary ring road moving rivers to stay on schedule

BY SAUL CHERNOS

algary’s new ring road is well on complete by 2022. Circle Drive in Saskatoon opened in 2013, its way to becoming a full-fledged Ring roads hasten the flow of traffic while Highway 216 in Edmonton ranks as loop. Northeast and northwest around some of the world’s biggest cities. one of the busiest roadways in Western Csections opened to motorists The Boulevard Périphérique circumnavi- Canada. Partial rings include Autoroute wanting to bypass the city in 2009, gates Paris, and rings feature prominently 30, which circumnavigates southeastern and a southeast section was added four from Melbourne, Australia to Lahore, Paki- Montreal, and the Regina Bypass, which years later. If all goes according to plan, stan. The terminology often differs – Wash- rounds just a portion of the prairie city. a southwest quadrant will open in late ington D.C.’s Capital Beltway harbours Calgary’s ring road, alternatively known 2021, with the remaining nine kilometres Inner and Outer Loops, and the London as Stoney Trail and Highway 201, will on the westernmost fringe scheduled to be Orbital runs 188 kilometres. In Canada, still technically classify as “partial” even

28 / AUGUST 2018 Closing the loop

with the southwest expansion. However, Hussain, who oversees construction of tion utilities corridor (TUC). With devel- the work will add 31 kilometres of mostly major capital projects for Alberta Trans- opment pushing outwards, the province eight-lane expressway to the current portation. “This is part of the long-term approached the Tsuut’ina First Nation to ring road, provide connections to several transportation and economic corridor. It negotiate for land. east-west highways, and serve as a major will enhance safety, support the economy “We were given only seven years from north-south corridor for avoiding Calgary’s and improve quality of life because people the date of the land transfer (2015) to hire increasingly clogged arteries. will be spending less time in traffic.” a contractor and finish this road,” Hussain “The city’s growing pretty fast and Planning for the southwest component says. “If we fail to finish in seven years, there’s a need for more highways to ensure began in the 1970s, when the province the land will go back to the First Nation, efficient movement of traffic,” says Rizwan started assembling land for a transporta- all the money the province has given to PHOTOS:KGL CONSTRUCTORS on-sitemag.com / 29 ROAD WORK

Along with all the conventional construction challenges, work on the new southwest segment of Calgary’s ring road has involved diverting rivers and disposing of unexploded ordinance. them will remain with them, and whatever reduce costs and avoid conflict with also proven challenging. Sections of the infrastructure we have built will also go to adjacent landowners and nearby residents. Elbow River and Fish Creek were relocated them.” Rather than trucking gravel from afar, because the waterways happened to lie The province quickly put the project to crews are mining aggregate underneath the along the planned route. “We did it in tender and selected Mountain View Part- corridor and crushing it into useable gravel stages,” Hussain explained. “We built the ners (MVP) to design, build, operate and at two facilities on-site. “It means we’re new channels first, then we blocked the partially finance the Southwest Calgary Ring not transporting gravel using hundreds of old channels.” Crews transplanted 16,000 Road project. MVP, in turn, subcontracted trucks every day,” Hussain says. Propo- fish and worked to stabilize banks, prevent design and construction to KGL Construc- nents have also located two asphalt plants erosion and create suitable habitat for tors, and work began early last year. within project boundaries. aquatic and shoreline vegetation. The $2.2-billion total projected cost To minimize noise from gravel and Considerable attention is also being includes project planning, real estate, util- asphalt processing, proponents invested in paid to flood mitigation and bridges are ity relocation and a $1.42-billion contract low-noise mufflers and generators for the being designed to accommodate sudden with MVP. That contract, in turn, covers plants and opted against back-up alarms. storm surges and rapidly melting mountain design, construction, 30 years of operation As a result, Hussain says, noise levels snowpacks. “The 2013 flood was a signifi- and maintenance and has MVP raising average 50 decibels, well below the 65 cant event,” Hussain says. “We’ve done all 40 per cent of project financing. The dBA standard. To keep dust at bay, crews the hydraulic modelling and we’ll be able private sector financing will arrive first and water gravel from the moment it’s mined to safely accommodate the flow of water cover design and construction. Once the using special spray nozzles as well as underneath bridges.” project is complete, the province will make filtering screens. The asphalt operations Another challenge arose from the corri- monthly payments to MVP for ongoing run on natural gas, further reducing emis- dor partly sitting on a former military base, operations and maintenance. The federal sions and odours. with unexploded ordinance left behind government will also provide roughly $250 “Alberta Environment and Alberta from weapons testing. “It’s a huge risk for million in infrastructure funding. Health are checking our gravel operations our contractors,” Hussain says, adding that “It’s a huge undertaking,” Hussain and we are well within the thresholds in the the Department of National Defence and says. “It’s a 31-kilometre-long section regulations,” Hussain says, noting that in Alberta Transportation scoured the area with environmentally sensitive areas, 49 the absence of provincial and federal stan- and decommissioned numerous potentially bridges and 14 interchanges.” dards for silica dust emissions, Alberta uses lethal explosives, while the contractors To meet the tight deadline, proponents Ontario Ministry of Environment standards. have unearthed a few additional ones. have taken pains to expedite activity, Environmentally sensitive areas have Generally though, the challenges have

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Bridges crossing the Elbow River and Fish Creek are being built with wildlife corridors for animals small and large. Corridors range from 15 to 30 metres wide and feature native grasses and shrubs. CALGARY SOUTHWEST RING Fencing will direct wildlife away from motorists and towards these passages. ROAD BY THE NUMBERS funding connections and related integra- placement and reduce site congestion,” 1 railway crossing tion, much of which is scheduled to open Rule says. “KGL can use photogramme- 31 km of six and eight lane in advance of the ring road extension. “Our try techniques to get 3D pictures of the divided highway budget on that is $133 million,” Radke current ground and calculate quantities to 49 bridges says, adding that the money is coming plan effective earthwork operations.” 14 interchanges from Calgary’s capital infrastructure plan- KGL has also equipped tablet comput- 1 culvert set ning budget. ers with an app that lets team members 1 tunnel Some city work was completed even see designers’ models in the field within 3 river crossings before crews began work on the southwest a five-metre accuracy. “Those who have it extension. One example is a pedestrian set up can determine what is happening been routine. To manage traffic, propo- overpass at Anderson Road. “That was and where it’s happening with a few swipes nents have designed detour routes that done so that not only can the pathway of the finger,” Rule says. “This technology match the number of lanes displaced by have a place to go while the construction is also very useful for identifying existing adjacent road closures. With multiple is being done, but it will serve as the long- utilities in an area of operations.” contractors and a crew of 1,400 strong, term link,” Radke says. With the project in full swing, all eyes it’s taken considerable effort to commu- There’s also cooperation in other areas. are on the 2021 deadline and on what nicate effectively, build a coherent team While the province is overseeing traffic matters most in the end. While Alberta and manage expectations. Nevertheless, management, including detour designs Transportation is driving the ring road’s Hussain sees the glass as half full. “When and plans, Calgary’s transportation division construction, the benefits to Calgary are you have more contractors and more provides ongoing feedback because city considerable. “It’s an important part of the parties involved, there’s more opportunities roads are involved. good movement network for getting into to innovate, brainstorm and have a better It’s the same with utilities, drainage and around the city,” Radke says. “We’ve product. We’re lucky to have experienced and flood-risk mitigation. “We’ve partnered been lacking a north-south connection contractors and professionals working with [Alberta Transportation] on a study along the west side of the city, and this together to ensure safety, environmental review of river crossings,” Radke says. provides it for us. It will form part of our protection and project quality.” “The city did quite an involved study [in skeletal road network system and will help While the province bears overall respon- 2015] to review the Elbow River Bridge, to move people around.” sibility, the City of Calgary is significantly make sure what they were proposing was Presuming all goes according to plan, involved as the central stakeholder. “We’re appropriate and satisfactory from a flood- Calgary’s Ring Road will be just nine working closely with Alberta Transportation ing and water quality perspective.” kilometres shy of forming a full circle on all the interface issues we have with While heavy machinery almost always when 2021 draws to a close. However, each other and to help them successfully hogs the spotlight at road-work sites, the province has already paved the way deliver this project,” says Julie Radke, computer-driven digital technologies have for the route’s eventual completion. Just the City of Calgary’s manager of ring road been prominent both in project board- last month, Alberta earmarked the funds integration and special projects. rooms and out in the field. In a written to pay for the final westernmost segment. Calgary isn’t contributing any fund- response to questions, Tim Rule, project The procurement process is expected to ing towards the ring road itself because director with KGL Constructors, says crews kick off shortly, while the province plans it’s built within the TUC and thus, under are using drones to take aerial photo- to fully complete its 101-kilometre ring by provincial authority. However, the city is graphs. “[It] allows us to plan material 2022.

32 / AUGUST 2018