Metrolinx and Infrastructure Ontario are listening and making changes to procurement and delivery models, Metrolinx president and CEO Phil Verster and IO president and CEO Ehren Cory told delegates at the recent Ontario Road Builders’ Association convention.
“Hopefully you will get a sense this year of the extent to which we continue to listen and adjust our procurement approaches and our delivery approaches to make sure all of you can play in some shape or form in our portfolio,” said Verster at a session Feb. 3 billed GTHA Transit Network Expansion.
“We have spent a huge amount of time figuring out how to deliver these projects better, how to work with you better and how to figure out how we go to market better and how we make the market available for everyone to bid in.”
“We haven’t put out as much work as I would have wanted in the last year and a half because we’ve taken time to really fix some of the processes that didn’t work that well.”
The key is to work effectively with industry to deliver projects, said Cory.
“If we are going to be successful its going to require us and industry partnering together,” he said. “We have been thinking really hard, many of you have been engaged in this process, to figure out how we can become a better partner.”
Metrolinx and IO are taking steps to make the procurement process, the bidding, the contract award and the early part of things work better.
“We all know that with construction projects it’s in that first six months post award that so many things either go right or fall behind and are hard to recover from,” said Cory. “So how do we do a great job early on, what we call early contractor engagement, in the time period between when a winner has been identified and when we get to financial close in our contract? How do we already start working together understanding risks, understanding contingency together and starting to think differently?”
Making sure industry partners clearly understand expectations and the scope of the work upfront is also critical.
“In the past we haven’t always been good at giving you early enough info that you could form your teams effectively, so we need to do that but you in turn hopefully that gives the industry the chance to organize itself effectively and bring the right skills needed,” said Cory.
Innovation is a core priority in public-private partnerships, he added.
“We are looking for bidders to come to us with different ideas of how they can get that incredible volume of work done quicker, more effectively, less risky,” said Cory. “Take risks that exist in the project for both of us and find ways to manage them better from your side that makes you a better partner to us, that makes the outcome better for all of us.”
One of the big issues has been the concept of “the model.”
“This whole talk has been about how we are thinking about enhancing and improving the model but there is a problem on the slide because it says, ‘the model,’ ” said Cory about the way things have been done in Ontario for the past 15 years. “It has a lot of great principles to it around due diligence upfront, effective risk transfer, good contractual models, measure twice cut once. Those principles aren’t going away but the model is constantly evolving.”
One of the issues that came up during last year’s conference is the idea of risk transfer.
“We’ve spent an incredible amount of time talking to the market, testing the market and some of you in this room may be aware but we’ve adjusted the model…we’re taking a lot of risk back,” said Verster.
“Some of you said last year, ‘you basically target only the big players, a lot of us are smaller players, this is not a conversation for us’… One of the things we’ve changed in our way of setting up these big contracts is that we’ve made it easier for large constructors actually getting smaller players in to do pieces of work as design-build contracts.”
To be able to deliver on the pipeline of infrastructure projects, it is important to shift the conversation away from risk transfer and start with risk reduction, said Cory.
“The right conversation is how do we chip away at it and make it smaller first,” he noted.
“If we can do a better job of defining the contract and the model for each project right, managing down the risk, engaging together early on to manage and share those risks in different ways and create the right incentives, we think we’re going to be able to deliver on the pipeline of projects and the $62 billion to come in the coming decade.”
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