The government reform on the methods of carrying out construction sites which is looming on the horizon is already arousing a lot of enthusiasm in the construction industry, where several major players are no longer bidding for fixed price contracts due to financial risks. And the future transport agency, expected this fall, should be at the heart of this overhaul.
As revealed The Press this Tuesday, the government intends to present a series of measures by June to create more competition in the construction sector, moving away from the traditional model of the lowest bidder. This reform would affect several areas, including health and education, but also the transport sector.
Read the column “Faster, cheaper: Quebec wants to become “sexy””
Already, the initiative is being welcomed almost everywhere in the industry. “There is a clear lack of interest among entrepreneurs in the public market due to the payment deadline, the lack of collaboration and unfair clauses,” asserts the lawyer and general director of the Quebec Association of Infrastructure Entrepreneurs ( AQEI), Caroline Amireault.
Until now, a large part of the infrastructure contracts awarded in Quebec are lump sum turnkey projects (CMPF). The latter are contracts with fixed prices and fixed dates. They therefore place the risks of cost overruns linked to execution on the engineering firm and the responsible contractors, as is the case with the Réseau express métropolitain (REM).
However, in recent years, CMPFs have become less and less popular in the industry. Several contractors advocate “collaborative” contracts, which involve more players in the equation and make it possible to speed up the work, in addition to reducing their costs.
These changes to the method of awarding contracts come as the government’s future transport agency is due to see the light of day next fall. Its mandate will be to better manage major public transportation projects, reduce their delays and reduce their costs. A bill must be submitted by June.
The two ideas go hand in hand more than ever, since the idea behind the agency is precisely to set up a model allowing more accountability for everyone, by “aiming for performance and risk sharing”, lit- on in internal documents of the Ministry of Transport.
PHOTO DAVID BOILY, LA PRESSE ARCHIVES
The construction site of the future Pointe-Claire REM station, in May 2019
According to Mme Amireault, the transport agency risks being “very attractive” if it allows entrepreneurs to do something other than turnkey projects at fixed prices. His group has been advocating for a while for the multiplication of the so-called “collaborative” model.
We were recently consulted by the Treasury Board to see what other methods we should move towards. I think there is an opening to move towards collaboration, probably first through pilot projects. It would be a real change of direction, and that’s so much the better.
Caroline Amireault, from the Quebec Association of Infrastructure Entrepreneurs
As early as last year, in a technical presentation, the Ministry of Transport already argued that the Public Bodies Contracts Act (LCOP) “generates significant rigidity in contractual management which is hardly compatible with the particularities and agility necessary […] in major project management.
“Greater flexibility” demanded
Some major players, such as AtkinsRéalis – formerly SNC-Lavalin – have not bid for CMPF contracts for a while due to their cumbersome nature. In 2022, the company had also revealed that fixed price contracts caused it to lose 821 million, or the equivalent of 42% of its revenues in this sector, in just two years.
For several years now, AtkinsRéalis has favored collaborative contracts, “which considerably improve transparency and collaboration between the client and the team responsible for carrying out the project,” explains the Canadian president of the organization, Stéphanie Vaillancourt.
His group, which welcomes the future creation of the transport agency, says the main advantage of the collaborative model is that it “includes a more collective assessment and allocation of project risks, with a cap on the amount of risk, and therefore the financial penalty, which can be absorbed” by the private sector.
“As the client and the private sector partner form a single team to develop the project plans and budget, […] this allows us to ensure transparency of costs and schedule and to have great flexibility allowing us to abandon a solution that is not in the interest of the project in order to find an alternative,” persists M.me Vaillancourt on this subject.
She points out that there is no shortage of examples of success in “collaborative mode”. In Toronto, the East Harbor Transit Hub, which AtkinsRéalis will develop with Bird Construction, “is one of the first in Ontario to be carried out as part of an alliance,” says the president. Such models are also already popular in the United Kingdom and Australia.
A very concrete example
According to transportation planning specialist Pierre Barrieau, one of the transportation agency’s main mandates will be to test “these new contract award mechanisms.”
The transport agency, for me, has a triple role. One is to be able to exit projects, two is to reduce costs and three is to control risks. And that involves reviewing structures and mechanisms. This is what we must move towards.
Pierre Barrieau, transport planning specialist
That said, the work to keep the transportation agency alive is far from over. Last week, Radio-Canada revealed that the Treasury Board “is resisting certain requests” from the Minister of Transport, Geneviève Guilbault.
PHOTO JOSIE DESMARAIS, LA PRESSE ARCHIVES
The extension of the Montreal metro blue line will require the expropriation of a certain number of residents.
The Treasury Board Secretariat (SCT) is particularly opposed to the future agency being exempt from complying with the Directive on the management of major public infrastructure projects.
It is in part this regulation that will have to be modified to allow the government to increase the number of contracts in “collaborative” mode.
In M’s officeme Guilbault, we persist: the agency must see the light of day quickly. “Quebec will have to carry out major infrastructure projects in the coming decades. We must modernize our ways of doing things, and we will propose important measures in this direction in the coming months. We must put an end to the status quo,” says communications director Maxime Roy.