Infrastructure Ontario releases December Market Update

Key Takeaways:

• The Crown Corporation currently has $46 billion in work currently under construction and more than $35 billion in procurement/pre-procurement.
• Officials say that have had to adjust their practices and timelines due to feed back from the industry and volatile market conditions.
• Since the last update in March, Infrastructure Ontario reached substantial completion on three projects.

The Whole Story:

Infrastructure Ontario’s (IO) latest Market Update shows it has more than $35 billion in pre-procurement and active procurement work currently on the go despite “volatile” conditions. 

The Crown Corporation’s update includes a listing of 31 projects in pre-procurement and active procurement totalling more than $35 billion in estimated design and construction costs. 

December’s list also includes 20 government-announced projects in the initial stages of planning, for which scope, timing and delivery model are still being determined. Since its last update in March, three projects in IO’s pipeline have advanced to construction, and three projects have been added in the justice, tourism and culture sectors. 

Since 2020, IO has brought 30 projects to market, began construction on 24 projects and achieved substantial completion of 30 projects. In just the last four years, it has completed eleven hospitals, six justice facilities, and ten transit and transportation projects. 

Officials stated that they saw “excellent competition” in all but one or two of IO’s largest hospital projects during the “tumultuous time”. The total value of contracts currently in construction is approximately $43 billion, not including the three Progressive P3 hospital projects in Mississauga, Ottawa, and Moosonee for which IO has now identified a development partner. 

Michael Lindsay, president and CEO of IO, explained that the organization has recently had to make significant changes due to changing conditions and feedback from the industry. 

“That dialogue has led directly to a number of substantive changes to our timelines, our contract models, and our approach to capital delivery,” he said. “We continue to be very deliberate and transparent about the staging/timing of our projects – taking note of market feedback about when to bring projects to market in order to secure the most robust competition. We continue to deploy a broad set of contract forms – selecting the model which is most appropriate to the size, complexity, and risks of a given project.” 

Lindsay noted that for some projects included in the update, IO is still working to determine the right procurement approach and models and will communicate those changes as soon as possible in the new year. 

“We recognize that there is a greater volatility associated with model selection than has been our historic trend,” he said. “We trust that market partners will recognize that this is driven by the volatility we are collectively observing within our industry.”

IO will also be working closely with ministry partners for projects in earlier stages of planning to identify opportunities for greater standardization of design, which they expect will streamline the planning process and improve project outcomes.

Lindsay cited three recent examples of the public sector and private sector working together in Ontario to deliver critical projects: 

• In August, IO launched the first competitive process of its kind in Canada to select a qualified Satellite Internet Service Provider (Satellite ISP) to deliver satellite internet service to the province. 
• Last month, Ontario’s Minister of Infrastructure Kinga Surma also announced the next wave of IO’s Transit-Oriented Community sites. 
• IO says it is looking forward to working with two new service providers in 2024 who will manage Ontario’s real estate portfolio (our Real Property Services program) and project manage many high complexity projects with a value of up to $20 million (our Project Management Service Provider, or PMSP). 
• LIndsay noted that espite extremely tight timelines, the team and IO’s partners successfully moved enough earth to fill Rogers Centre while conducting site preparation work for the Volkswagen EV battery plant in St. Thomas. Crews were able to finish this work ahead of their deadline so VW can begin building in the new year.

The update also saw substantial completion on three major projects: 

• GO Expansion — Stouffville Corridor 
• Highway 401 Expansion 
• West Park Healthcare Centre

IO added that as its new Progressive P3s advance, they are working with development partners on all three hospital projects: (Weeneebayko Area Health Authority Redevelopment, Trillium Health Partners Broader Redevelopment — Peter Gilgan Mississauga Hospital,  and the Ottawa Hospital Civic Campus Redevelopment) before proceeding with a fixed-price contract.