RC106 MayJune2023 - Magazine - Page 42
CLOSING SHOT
THE SOUNDS
OF THE MARKET
by Alain Grégoire
MAGINE THROWING A PARTY, but nobody comes. In light of
ongoing uncertainty in the Canadian construction market, a growing number of constructors, suppliers and
design consultants are taking a more cautious approach
to major project procurements. Project owners who have
not adjusted to this recent market shift may face a variety
of negative scenarios when procuring construction services,
including a lack of responses; prices that come in significantly over budget; a project riddled with disputes, claims, and
cost or schedule overruns; cancelled procurements; or even
damaged reputations.
It’s important for project owners to consider the current
competitive landscape, capacity, risk tolerance, and level of
market interest well before initiating a competitive procurement process. Certain aspects of your project, or the
procurement process itself, may deter competent, capable
constructors from even considering participation. Sparking
the desired interest in your project, however, can be as simple as conducting a market sounding.
What is a market sounding?
A market sounding is an exploratory, intelligence gathering exercise designed to help you understand how your
project will likely be received by the local construction market and identify facets of the project that may cause concern.
This is not a procurement opportunity but rather a means to
acquire information. Market soundings give you an opportunity to generate project interest by freely engaging in a
dialogue with constructors, suppliers, design consultants,
and lenders before formal project procurement activities begin. Best suited to owners developing complex, multi-stakeholder, or atypical projects, market soundings are highly
beneficial, especially for those considering alternative forms
of project delivery, such as Design-Builds or, more broadly,
Public-Private Partnerships.
Ideally, you should time a market sounding after you
have sufficiently developed the project concept and are able
to fully communicate its scope and scale. By establishing
the technical requirements, financing and proposed delivery method, you can provide a clear description of your
project, but also have enough flexibility to take advantage
of constructive feedback and adjust the project as needed.
If you wait until the project is fully defined, it leaves little
opportunity for the market to provide useful input. Key
players may also be less likely to participate if they believe
they have little to no influence on project development and
procurement.
At its core, a market sounding is a proactive approach to
managing risks. Whether you’re concerned about interest,
capacity, budget, technical challenges—or simply want to
gain a greater understanding of key industry concerns—a
market sounding can help you:
GENERATE EARLY AWARENESS AND INTEREST IN YOUR PROJECT A market
sounding opens the door to conversations that bring aware-
I
42
RENEW CANADA – MAY/JUNE 2023
”Project owners should consider the current
competitive landscape, capacity, risk tolerance,
and level of market interest well before initiating a
competitive procurement process”
METROLINX
ness to your project. It enables you to connect directly with
industry players to solicit ideas, generate interest and make
your project more feasible or appealing to the market.
SELECT AN APPROPRIATE DELIVERY METHODOLOGY The delivery
model you choose can make or break your project. A market
sounding can give you a sense of how many key players have
experience or interest in alternative delivery approaches.
INCREASE TRANSPARENCY SURROUNDING PROJECT SCOPE, RISKS, AND
KNOWN CHALLENGES When you bring a project to the marketplace with transparency—about your concerns, the known
risks, and perceived challenges—you gain the opportunity
to strategize. Key industry players can provide feedback
that may help you find affordable or timely approaches to
mitigate risks.
OPEN THE DOOR TO DISCUSSIONS AROUND INDUSTRY TRENDS AND NEW
TECHNOLOGIES By engaging industry players with a market
sounding, you bring together the minds and experiences
of a larger pool of experts that can suggest new, innovative
solutions to more complex, atypical projects.
Will a market sounding provide you with an abundance
of useful information or guarantee project success? Not necessarily. But it does offer a relatively inexpensive ‘risk-hacking’ exercise that can help you avoid costly procurement
delays or considerably greater costs during construction,
commissioning, and operations.
Alain Grégoire is vice president
of Infrastructure at Colliers
Project Leaders.
RENEWCANADA.NET
