By Captain Jamie Marshall and Darcey Hormann, Colliers Project Leaders
The abrupt reset of international trade relationships in recent months has spurred Canada and its partners to seek new strategies for economic prosperity and growth. In meeting the moment, countries seem to have two choices: zero in on what’s essential and try to restabilize — or boldly forge a brand-new status quo.
Canada has clearly opted to move forward boldly. The federal government has pledged to act swiftly on projects of national significance and deepen global ties to build one of the strongest economies in the G7.
The country’s port infrastructure has a pivotal role to play in realizing these ambitions, and the government’s commitment to fast-track “promising projects” presents a generational opportunity for ports to renew, expand and reposition themselves for the future.
But how do capital project owners make sure their ventures are seen as having the right kind of promise? What can be done to make a proposal stand out as something funders and investors want to get behind?
Beyond having a rock-solid business case and sound fundamentals, it comes down to navigating early project stage gates successfully, aligning with local, national and strategic interests, and outlining a rigorous delivery system that will ensure the project is executed in line with expectations — those of both project owners and project funders.
The push is on
Canada’s ports, freight railways, shipbuilders and industrial exporters have been in maintenance mode for decades, operating mainly within the limits of their existing infrastructure. Most would agree large-scale, long-term enhancements are overdue, and strategic projects are in process on all three coasts.
Roberts Bank Terminal 2 at the Port of Vancouver is a prime example of a significant expansion that will increase Canada’s West Coast container capacity by nearly a third. The Arctic Gateway Group’s build-out of capital infrastructure at the Port of Churchill is set to dramatically expand northern shipping. A proposal has been made to establish an Arctic security corridor terminating at a new port in Grays Bay, and early feasibility studies have been undertaken for a port at James Bay and at Port Nelson.
Complementing these efforts are investments in Canada’s shipbuilding industry to produce combat and non-combat vessels at the ports of Halifax and Vancouver under the National Shipbuilding Strategy.
The potential benefits of these undertakings are enormous. Roberts Bank Terminal 2 alone is expected to facilitate roughly $100 billion in trade every year. But the gains will take years to realize.
Long timelines are part of what makes major infrastructure initiatives inherently high-risk. Cost — and cost escalation over time — are another. The Port of Churchill venture is proceeding on a combined federal–provincial investment of more than $200 million. The Arctic security corridor and Grays Bay road/port project is estimated at more than $1 billion. The estimated price tag for Roberts Bank Terminal 2 is in the billions as well.
A different scale of risk
The bigger the project, the more likely it is that complexity and issues with the approach taken will cause delays and overages. These can be extremely expensive. Running 10 per cent over on a $10 million budget adds $1 million in project costs; on a $10 billion venture, a 10 per cent overage would put investors on the hook for an extra $1 billion.
Because major infrastructure projects typically involve public funds, they are also often in the spotlight. That introduces a real and significant element of reputational risk. Any problems or overruns can end up generating bad publicity and damaging corporate relationships.
For these and other reasons, funders want to get behind projects that are strategically aligned with commercial, community, and national priorities, with as much risk eliminated as possible. That’s on top of being shovel-ready — prepared to move fast — and led by proponents with the organizational capacity and tools to deliver.
Positioning projects for success
Major infrastructure projects that are attractive to funders need a few other key ingredients, including an up-to-date, validated business case; a thorough economic feasibility analysis; and as much completed advance engineering work as possible so plans are realistic and fleshed out.
It is a distinct differentiator for any funding request when project partners have been engaged early and often and have a common vision of project outcomes. Early in this case means before advancing to the permitting stage.
With respect to demonstrating capacity to deliver, it’s critical to set up a robust governance structure that is tailored to the unique demands of the project and partners, and to have a practical delivery strategy with a clear path to positive outcomes. All relevant contingencies need to be thought through, such as when and how organizations will need to scale up to achieve project objectives.
While it may seem obvious, it’s important to acknowledge that there’s no room for wishful thinking, especially when a funding window may be open for only a short time. Project readiness and governance need to be assessed proactively. Assumptions must be challenged. Unintended information gaps need to be closed. Otherwise, the project is at risk of delay or even defunding.
Obtaining this kind of perspective can be a challenge given current skills shortages. Many organizations looking to take on major projects lack broad, cross-functional expertise to cover the full set of considerations. An independent internal or third-party review can bring a fresh set of eyes and a diverse perspective.
The scope and function of independent project reviews
While the term ‘project review’ might suggest a single-point-in-time activity, in fact there’s a fair bit of flexibility in how such processes can be structured and used. Project owners can have an arm’s-length internal team conduct a review or can involve a third-party organization as reviewer and advisor over the course of the entire project — during preparation, at key milestones, or on an as- and when-needed advisory basis throughout.
Depending on the project’s specific needs, an independent review may look at fundamentals like scope, planning, organizational ability to deliver and capital feasibility. Financing and contracting options can be factored in, enabling owners to compare the pros and cons of traditional procurement models such as design-bid-build, public-private partnership (P3), and others with more collaborative and contemporary methodologies such as integrated project delivery (IPD), Alliance contracting, or a modified design-build with guaranteed maximum price (GMP). Project controls, management processes, delivery plans and procurement cycles can all be in scope, along with governance and risk-management approaches.
Strategic readiness
Independent project reviews can help expose issues early on, long before they become irreversible or trigger costly delays. They create opportunities to anticipate risks and solve problems ahead of time, cutting across functional silos to establish a truly holistic view of the project and a solid foundation for progress.
What’s most critical is timing. Project reviews should start early — when opportunities can be seized, and cost and risk consequences are low. Completing a project review sooner can help project owners ensure a strong approach right out of the gate.
Captain Jamie Marshall is National Sector Lead, Ports & Marine at Colliers Project Leaders. Darcey Hormann is the company’s Director of Infrastructure for Western and Northern Canada. Both are experienced in planning and executing major infrastructure projects for ports and related industries. Colliers Project Leaders has long-established practice of carrying out independent third-party reviews and Colliers Canada is the country’s oldest consulting company. To learn more, visit: www.ColliersProjectLeaders.com
