Bert Clark has a deadline to meet, and it can’t be missed.
Clark, a lawyer, is president and chief executive officer of Crown corporation Infrastructure Ontario and his organization is responsible for ensuring contractors
finish some of the key sites being built for the 2015 Pan American/Parapan Am Games in Toronto.
“The buildings are coming up quickly,” says Clark. “We have nine sports facilities from pools to soccer stadiums to field hockey venues. They are well underway.”
The Pan American games is one of the country’s biggest infrastructure projects. More than $730-million in capital spending is being budgeted to build sporting venues around the Greater Toronto Area, according to documents from the Toronto 2015 Pan Am Organizing Committee.
In addition to the sports facilities, which are located in various parts of the GTA, there is also the Athletes’ Village being built downtown. The lion’s share of the overall Pan Am capital-spending budget is allocated to three bundles of projects being built using a public-private partnership model overseen by Infrastructure
Ontario, as is the Athletes’ Village.
The P3 projects, like the games, attracted interest from around the world. Tobor Emakpor, an infrastructure lawyer at Osler Hoskin & Harcourt LLP in Toronto who worked with some groups that bid on projects, says, “there were quite a few foreign players that joint-ventured with local firms.”
One thing that stood out for him was how Infrastructure Ontario was “successful in getting things procured on a short time frame.”
The projects break down as follows:
The CIBC Pan Am/Parapan Am Aquatics Centre and Field House high-performance aquatics and athletics facility will be constructed on the University of Toronto Scarborough campus budgeted at $248 million. It will cover aquatics (diving, swimming, synchronized swimming), fencing, and pentathlon. PCL Aquatics Centre 2012, a joint venture between PCL Constructors Canada and NORR Ltd., is building it.
This bundle covers four projects and is being built by Ontario Sports Solutions, a consortium that includes Bouygues Building Canada Inc., a France-based builder, Kenaidan Contracting Ltd., CannonDesign, FaulknerBrowns Architects, and Arup Construction.
It includes the CIBC Pan Am stadium in Hamilton, a $146-million facility that will become the new home of the Canadian Football League’s Hamilton Tiger-Cats.
The $52-million CIBC Pan Am Athletics Stadium, which is being built at York University, will cover athletics. There is also an accompanying $3-million Toronto Track and Field Centre, a warm-up and training facility for athletes.
The $56-million Milton Pan Am Velodrome for cycling is being built in the town of Milton.
Bondfield Construction Company Ltd. won bundle three. It includes the $85-million Markham Pan Am Centre, which will host badminton, table tennis, and water polo.
The Pan Am Fields, home of field hockey, is a $12-million facility being built on the downtown University of Toronto campus. The Etobicoke Olympium, an aquatics training centre, is expected to cost $20 million.
In addition to the sports facilities, there is also the $514-million Pan Am Athletes’ Village, which is located on the West Don Lands near downtown. It’s an alternative finance project being built by Dundee Kilmer Developments Ltd., a consortium whose team includes: Dundee Realty Corp., Kilmer Van Nostrand Co. Ltd., EllisDon Corp., Ledcor Design Build (Ontario) Inc., Brookfield Financial Corp., and architects Kuwabara Payne McKenna Blumberg, Daoust LeStage Inc., and TEN Arquitectos.
Most of the projects are on time and many are under budget, some by millions of dollars. Only the Velodrome is over budget.
That according to recent Infrastructure Ontario statistics, which show of the 30 AFP projects substantially completed to date, 29 were under budget and 22 were finished ahead of schedule. The $12.9 billion in awarded contracts delivered $2.65 billion in savings over the approved budgets.
The games kick off July 10, 2015, and that means everything must be ready on time. Charles Caza, general counsel for Bird Construction Inc., which put together a consortium to bid on some projects but was unsuccessful, said in a project like this “time is especially critical. It was well communicated to us that we were not going to finish after the events. It’s always a risk to take on an aggressive schedule. Here, you just can’t miss.”
Lawyers say the Pan Am games are advancing the development of P3 and AFP projects in a couple of ways. First, the projects were all issued using the design, build, and finance model (DBF), without any maintenance (DBFM) or operations component (DBFMO). Clark says DBF “is a delivery model that we’re using for probably over half the projects in our current pipeline.” The decision to do a DBF versus a DBFM or DBFMO depends on the project, he says. Adding maintenance or operations components forces builders to stand behind their work for as many as 30 years, which is attractive, Clark says. However, in some cases “it doesn’t make sense to do that.” For example, a DBFM or DBFMO doesn’t work well in situations like building a hospital wing, where the structure is tied into existing mechanical and electrical systems, or if there is already a maintenance structure in place, such as a new building on a campus, which already has people dedicated to operations. “There is a lot of thinking that goes into one delivery model over another.”
In this case, the projects are being turned over to various municipalities and organizations upon completion, so a DBF was better suited, he says. Clark is well versed in infrastructure financing and building. He started his career as a corporate lawyer at Osler Hoskin & Harcourt LLP, before joining Queen’s Park in 2003 as a special assistant to the minister responsible for infrastructure. He left there in 2005 and joined Infrastructure Ontario, when it was launched, holding a variety of roles. He played a lead role in introducing alternative finance procurement, which is at the heart of what Infrastructure Ontario does. He left there in 2008 and joined Scotiabank, where he ran its North American infrastructure business and returned to head up Infrastructure Ontario in August 2012. Clark said one of the “strong incentives” put in place in the Pan Am contracts to encourage builders to meet their deadlines involves financing. “We’re not paying them until the project is done,” Clark says. The various project developers have borrowed money from banks to build the projects. “They can’t pay off the banks until we pay them, and we don’t pay them until the project is substantially complete. The clock is running on their loans and every week they’re late is interest they will need to pay.”
Another interesting innovation to the Pan Am project is the Athletes’ Village. It was built with a view to selling the units as condominiums when the games are over.
Clark says following the games, the units will be retrofitted — for example, existing kitchen countertops will be removed and granite installed — and sold as residential units. However, usually shovels do not break ground until a condo development has sold a certain number of units in advance. “We are asking people to build condominiums without any pre-sales, which is not how condo developers normally do things,” Clark says. It meant the developers took on the risk and borrowed money from banks. Infrastructure Ontario agreed to backstop the loans in the event that the games don’t take place.
The Pan AM P3 projects are also noteworthy because of the number of local municipalities and organizations involved that will take over the venues once the games are complete. It includes the cities of Toronto and Hamilton, the towns of Markham and Milton, York University, and the University of Toronto, among others. Osler’s Emakpor says the Pan Am P3 projects are also noteworthy because they brought together a lot of public stakeholders. “Infrastructure Ontario has to steward and marshal all those differing interests.” From Clark’s perspective, the future for P3s remains bright. “We have $18-billion in planning and procurement. We have a very deep pipeline of projects.” The focus of late has been on a “massive backlog” in health sector capital spending and aging Ontario hospitals, which average 42 years old.
Currently, there is $3 billion of construction under way and another $5 billion has reached substantial completion.
Next on the horizon is transit. “The area really poised for growth is transit and transportation. We have about $8 billion in planning and procurement.” It includes the Union-Pearson express line linking the airport and downtown, light rail transit in Ottawa, the Waterloo region rapid transit, and the Eglinton light rail transit.
“That area is just taking off.”
As for other sectors, Clark noted Infrastructure Ontario was recently assigned its first transmission project and it has also stated its third college project. “We have a very, very active pipeline.” As for the Pan Am games, Clark is comfortable with the progress “So far they are going well. They are on time and the vast majority of risk has been transferred to the builders and their financiers. We are not losing a ton of sleep over those projects.”