RC113 JulyAugust 2024 - Magazine - Page 24
TRANSIT
RISKY BUSINESS
Tackling transit infrastructure project risk by John Allen
I
What is risk?
Risk is essentially the unknowns around projects. It is the
unexpected gas pipe, or contaminated soil. It can also be
from drawn out permitting processes or local stakeholder
opposition. Anything that causes delays can reverberate
through a project schedule and lead to signi昀椀cant project
delays and cost escalation. The larger those projects get,
the more those risks and consequences are ampli昀椀ed. Risk
is like a cancer for projects. If not prevented or treated
early, it spreads, and its consequences become much more
serious.
The experience of handling risks has wider impacts on
the market. Bidders having to price in risks they cannot
control will build in contingencies as protection that driveup project costs overall. Where risks are not properly
dealt with it creates an increasingly fractious environment
driven by disputes and costly legal challenges. Companies
are stepping away from delivering transit projects because
the 昀椀nancial impact of a project going wrong could have
serious impacts on their company overall.
John Allen is vice
president at Global
Public Affairs.
24
Targeting the usual suspects
Over time certain risks continue to crop up on transit projects. Their frequent appearance has perversely had some
bene昀椀t in helping projects to anticipate those risks and draw
on best practices to handle them better. These common risks
include utilities, geotechnical conditions, municipal planning and permitting, site access, community interactions,
supply chains, labour and skills, and certi昀椀cations.
Early work around utility relocations is now common
practice and Hamilton went a step further by using the
RENEW CANADA – JULY/AUGUST 2024
upcoming LRT as an opportunity to refresh their old
downtown underground infrastructure. British Columbia
has supportive policy agreements with municipalities
as a condition of transit funding to smooth through the
permitting process, and Quebec and Ontario have brought
in legislation to help provide greater certainty to timelines
in areas like site access and permitting. Edmonton Valley
Line West set clear expectations around local stakeholder
engagement laid out through the lifetime of the project
with an emphasis of proactive relationship building with
key stakeholders and timely responses to queries.
Risk isn’t static
Through a project’s delivery timeline risks evolve, they
grow, and can fade away. There are four critical stages where risk is heightened and need special attention:
Pre-contract award, at contract award, through transitions,
and entry into operations.
The biggest potential to impact risk is early in the project preparation. The collection of data, engagement with
the market and local community, how procurement and
contracts are crafted, and having supportive plans around
the environment or employment and training can all have
major bene昀椀ts. British Columbia sets the standard around
transparent market engagement to shape the approach
chosen, help identify project risks, and build con昀椀dence
among suppliers.
The period between selecting a winning bidder and
contract award can stall momentum, and waste time at a
critical point. Get a bad start and things can quickly snowball. The Eglinton West LRT provides an excellent template to follow with the owner working hard to do all they
could to ensure the successful bidder could hit the ground
running. This included mapping out and progressing
all necessary permits, undertaking site preparation, and
carving out budget for key equipment and early enabling
work to put the project on the best possible footing.
Risk is also signi昀椀cantly heightened through project
transitions and interfaces between di昀昀erent specialisms.
People can tend to work in silos and focus on their own
piece of the project. It is important to drive good communication, have clear accountability, and put in place
the right incentives to encourage each component part to
think of overall project success and work with each other.
METROLINX
N 2023 CANADA INVESTED around $36 billion in transportation
infrastructure. This investment has grown substantially
in recent years as provinces and municipalities try to
keep up with the rapid growth of their communities.
It still arguably isn’t enough to keep up with what is
needed. That is why it is important to ensure every
dollar is well spent. According to a recently published Australian study, rail projects see an average cost escalation of
45 per cent worldwide. And while some of that can be put
down to inaccurate upfront forecasting, risk is a major contributor and an area where there are many opportunities to
have a big impact to reduce project costs.
