The Generals - Spring/Summer 2011 - (Page 25)

feature Let’s Take a Trip Down By Gerry Russ WHEN CLIVE THURSTON asked me to write an article for The Generals Magazine, I did not hesitate for a second. After agreeing, the next few days were spent considering what the topic should be. The magazine, after all, is called The Generals, so the focus should be on the target audience – yup, general contractors. After numerous fits and starts, it occurred to me that it would be fun to take a look backwards and really examine what has happened in the last number of years and see if we can correlate this to the present, and hopefully, the future. The year is 2004, and the first major Infrastructure Ontario project is about to be awarded. It’s taken the better part of 18 months to negotiate a definitive agreement between all the parties. Never again do I want to go through something that strenuous! It seemed to me that every time an agreement was in sight, someone or something would find a way to get the process back to square one. I was just a mere hanger-on, yet the stress and tension on all parties was immense. That was my first encounter with what I now call the new economy; I didn’t like it but in reflection, it was the start of immense changes in the construction marketplace that we must deal with today. From that date, Ontario as a province continued to go down the road of alternate financing procurement. Despite complaints from various sectors, including contractors and their associated and various stakeholders, the process continued to gain traction, so much so that the province of Ontario has become a leader globally in these forms of projects. There is a reason why every major global P3 player has established a beachhead in Ontario. Clearly, those who decided to get on the bandwagon have been rewarded. So let us examine the effects of this and look at some of the key stakeholders. General contractors – While I understand that this newfound procurement model was made for the larger contractor, it still amazes me that so few contractors really spent much time trying to understand the process. As more and more projects came on stream and the model continued to grow, it was always the same participants. There have been numerous attempts to either stop the process or change it significantly to allow a larger representation to participate. To date, it has been sporadic and disjointed and little has been accomplished. This procurement model is not going away any time soon. In fact, look at the latest projects being procured using this model: the Pan Am Games, Metrolinx, as examples. If this model continues to expand, then each and every contractor has and will continue to be affected. Size is important, but it is not the only issue. One only has to look at the OPP Detachments and the MTO Rest Area projects. They are, for all intents and purposes, a group of small projects put together to make the financing work. There are probably hundreds of general contractors in this market that can build these projects, yet when they came out, all the small and midsized builders did not want to get involved. Fortunately, there was enough other work in the marketplace so everyone was content. Well, let’s look at today’s bidders lists; they seem to be getting longer every day. Even traditional procurement projects are growing in size. There is a reason why the top builders have grown exponentially and profitably, while at the same time creating barriers to entry for the next tier of builders. At what point in time will the next tier become engaged? The longer the wait, the harder it will be. Let’s not overlook that over the past five years, the largest contractors in Canada who have participated in this game have on average almost doubled in size over the past five years. It may be size of projects, but is it really? Or is the unwillingness of spring/summer 2011 the generals 25

Table of Contents for the Digital Edition of The Generals - Spring/Summer 2011

The Generals - Spring/Summer 2011
Chairman’s Message
President’s Message
Member Milestones
Upcoming Events
The Women of OGCA
Infrastructure Ontario: The 10-Year Plan
Life AFTER Stimulus
Are Higher WSIB Rates Inevitable?
Let’s Take a Trip Down Memory Lane
Buttcon Ltd.: Earning Loyalty Through Fairness
Century Group Inc.: Providing Great Service to Clients
Index to Advertisers

The Generals - Spring/Summer 2011