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What Makes a Project “Top?”

February 23rd, 2010 Mira Shenker

We asked a varied group to review this year’s 
Top 100 and, using their own criteria, 
to choose their own top-ranking Canadian projects.

Juneau chose his number-one project because, like many projects on the Top 100, it shows that we can actually complete big undertakings. His top pick is the Red River Floodway Expansion (#29). “This [brownfield] project would have been very difficult to start without the Canada Strategic Infrastructure Fund (CSIF) impetus.”

He ranks Quebec’s Autoroute 30 (#11) second for similar reasons. Also started, or restarted, with the support of the CSIF, this project has had its share of roadblocks. “Many were skeptical,” says Juneau. But it’s a top project in his estimation because it represents the work of a project champion, in this case at the federal level. “Serge Marcil, a former federal MP representing one of the relevant ridings, worked very hard to get the project underway,” says Juneau.

Like ReNew Canada, Henderson focused on the numbers, but used his clean energy background to rank his top projects.

“The numbers tell the tale,” says Henderson. The total capital financing requirement for clean energy projects in the Top 100 is $23 billion. “Energy ranks just behind transportation in terms of importance to our country’s infrastructure pipeline,” he says.

Henderson chose projects that represent future opportunities for developers and the public sector. He says large hydro will become more important as sites in Labrador, Quebec, Ontario, Manitoba, Saskatchewan, Alberta and British Columbia offer the potential of cost competitive base load electricity supply.

NaiKun Wind Energy (#5)

“Environmental and stakeholder issues will need to be addressed to green light many of these projects,” says Henderson. “However, the pace of development may be slower than the industry would prefer. Power authorities will be very careful in committing to large projects.”

Henderson says larger-scale wind power projects will come online regularly, and biomass electricity generation is on the cusp of breaking through technical and economic barriers that will unleash the more effective use of Canada’s biomass feedstocks.

But Shin cautions, “Infrastructure projects that may seem oriented towards environmental and social sustainability at first glance can actually bring with them a host of concerns.” While no infrastructure project is without impact, Shin’s analysis shows that some of the Top 100 have done a better job of taking environmental, social and economic impact into account than others.

Shin’s top five are: Alberta Schools Alternative Procurement (#33), Sydney Tar Ponds Cleanup (#51), Rivers District Community Revitalization (RDCR) Project (#78), Fort McMurray Water Reclamation Facility (#79), and the University of Calgary’s Energy Environment Experiential Learning building (#80).

Juneau also zeroed in on the RDCR, saying he was tempted to list this project as his number one. “I strongly believe that infrastructure programming can and should be used to revitalize challenged neighbourhoods in our major cities, for the benefit of the country as a whole.”

The Sydney Tar Ponds Cleanup (#50) made everyone but Henderson’s list (Henderson was focussed on energy projects). What’s so great about this project? It’s certainly seen its share of controversy, from disagreements between the Sierra Club of Canada and the Government of Nova Scotia on which method of environmental impact assessment to use to clean up the tar ponds, to which remediation method to use.

Fort McMurray Water Reclamation Facility (#79)

“Many would only want to say that this project is long overdue, period,” says Juneau. “But it still deserves to be recognized, given how painful it was to get it started and executed. Let‘s hope that all the relevant lessons have been or are being learned.”

Shin, too, found the pros far outweigh the cons. The environmental and social impact remains to be measured. Prolonged use of the treated site and environmental and weather conditions may cause the materials used to stabilize the contaminants to erode, limiting the effectiveness of remediation. As a result, continuous monitoring of the site is required in order to ensure the contaminants have not reassembled. But the economic benefits of the project are clear: it will raise property values and, as exposure to toxins is reduce, it has the potential to decrease health costs.

Another project everyone ranked high is the Canadian Museum for Human Rights (#53). It’s being built to LEED Silver certification, for starters, but Bowerbank and Shin both note the project’s social impact as its winning characteristic.

“Its cutting-edge architecture could be influential nationally and internationally, much like Frank Gehry’s Guggenheim Bilbao design,” says Shin.

Juneau, who made the museum his number nine, says, “Truth be told, I liked this project when its promoters first sought infrastructure funding, but in light of the mandate of the CSIF and limited funds, the [Red River] Floodway was a better fit. There has been an evolution and the tenacity of the Asper family has been rewarded.”

Alberta Schools Alternative Procurement (#33)

Plans to fund a national student human rights education and travel program would attract 20,000 Canadian Grade 9 students to the museum annually. Once implemented, such a program would have a long-term impact on the importance of human rights in communities across Canada. This may have an impact on international visitors similar to the equality- and tolerance-oriented exhibit at the Anne Frank Museum in Amsterdam. As Bowerbank says, “It does something for the Canadian psyche.”

Bowerbank likes the international element of this project and says “it’s an opportunity to highlight how important the triple bottom line (environment, social and economy) has become.”

But, as Shin points out, the museum has come under criticism for being constructed on one of Manitoba’s richest First Nations artefacts sites. To make matters worse, the area wasn’t fully excavated before construction took place since not all artefacts could be collected and analyzed. Continued investigation is difficult given Manitoba’s allegedly weak heritage regulations and increased development in the surrounding area in recent years.

Henderson’s pick, NaiKun Wind Energy (#5), made Shin’s shortlist as well as Bowerbank’s top ten. Shin says that while the turbines will displace 450,000 tonnes of greenhouse gas (GHG) emissions per year and partnerships were formed with the First Nations to provide short and long-term employment, it may hurt the area’s ecological diversity. It’s listed as an “important bird area” under BirdLife International. “Environment Canada data was omitted in environmental assessment of black scoter staging for up to a month during spring time in the area,” says Shin.

University of Calgary’s Energy Environment Experiential Learning building (#80)

Shin also has concerns about the St. Joseph Wind Farm (#21). Although it would contribute $500,000 annually to municipal coffers of Montcalm, Mantioba, it’s already been delayed by more than a year as a result of Babcock & Brown’s financial troubles in late 2008. The delay has also pushed back the power purchasing process. The project’s new backer, Pattern Energy, has approached the province for help with financing the project. A delayed construction schedule could prevent it from qualifying for federal stimulus subsidies, which requires that wind turbines be operational by March 2011.

In other renewable energy projects, Bowerbank likes Hydro-Québec’s Eastmain-1-A/Sarcelle/Rupert Project, making it his number two.

“I like the scale of [this project] and we need to consider its economic benefit,” says Bowerbank. “When it comes to water projects, there’s always some concern because they’re so intrusive of waterways.” But, he says hydro is big for Quebec and the benefits to the community outweigh any negatives.

Shin prefers British Columbia’s Harrison Hydro Project, the long-term benefits of which include improved communications infrastructure; improved health and safety for residents; displacement of the costs, risks, CO2 generation and noise pollution associated with operation of the two diesel generators currently used to supply electricity to the communities; expanded economic development and employment-creation opportunities.

Even so, Shin notes that the project’s environmental benefits were criticized by the Western Canada Wilderness Committee. The region’s forests would be threatened by roads and transmission lines. In 2008 the provincial Ministry of Environment officially lodged a laundry list of complaints, including threats to red-legged frogs’ habitat, old-growth forests and fish-bearing rivers.

The Fort McMurray Water Reclamation Facility (#79) made both Shin’s and Bowerbank’s list.  Beyond its use of biological nutrient removal technology and a composting facility to further reduce its environmental footprint, Shin says it also has “good news story potential.”

Canadian Museum for Human Rights (#54)

Juneau focused on gateways, something the others didn’t consider. He ranked the Windsor Gateway (#99) and the Dorval Interchange Redevelopment (#69) as his number three and four. Of the Dorval Interchange, he says, “This is a more focused gateway project, but access to one of Canada’s key airports just has to be improved. Further projects will be required to support this goal, but this is a critical step.”

Both he and Bowerbank singled out Toronto’s Spadina Subway Extension (#3) as one of their top ten. “I wanted to have a least one project that includes a strong element of interregional connection,” says Juneau. “This subway line does just that by connecting Toronto to York Region and at the same time serving the needs of York University.”

Juneau concludes, “There’s much more to think about, and more research needs to be done into whether this level of activity is greater than in previous periods, how we set priorities and select projects, and whether we need more overall coherence when many projects are pursued in the same sector.”

There are many more factors by which these projects could be ranked—for instance, are they appropriately integrated into urban and regional development? Do they contribute to a community’s revitalization? Are they employing Canadian companies and firms? Those questions will have to wait for next year.

André Juneau, former deputy minister of Infrastructure Canada and recent Canadian director at the London-based European Bank for Reconstruction and Development.

Chris Henderson, president of Lumos Energy, and advisor and partner to Aboriginal communities across Canada developing clean energy generation projects.

Melissa Shin, managing editor of Corporate Knights magazine.

Andrew Bowerbank, president and chief strategy officer of EC3 initiative, and former executive director of the World Green Building Council.

The Top 10

January 11th, 2010 Mira Shenker

In this year’s Top 100 list, our first ten projects represent $26.49 billion in infrastructure investment—in the game of infrastructure development, that puts them at the top.

When construction officially began in May 2009 on Hydro-Québec’s renewable energy project along Northern Quebec’s Romaine River, Quebec Premier Jean Charest said, “Today, we are launching the biggest construction project in Canada.” We agree—after all, it is our number one project for the second year running.

Not only is this a massive construction site, generating about 975 jobs for each year of construction, it will pump $3.5 billion into Quebec’s economy through new contracts and the purchase of goods and services—this according to CVTech Group, the builder on the project. Hydro-Québec says the Romaine project will generate economic spinoffs in the range of $3.5 billion for Quebec as a whole and $1.3 billion for the Côte-Nord region.

As with all mega-projects, it’s not all roses. The problem is expressed pretty clearly in Monopoly’s newest spinoff, Monopoly City. The game lets players build their “dream cities” and screw other players by putting “known hazards” like power plants in their “districts.”

There are plenty of real-life players who feel they are losing the game for exactly that reason—and this September through October, a group of 28 of them ran 42 kilometres each from Matagami, near the Rupert River in northern Quebec, to the Romaine River on Quebec’s lower North Shore as a statement against the Romaine project’s four dams. When completed in 2020, the Romaine hydro complex will produce 1,550 megawatts of hydroelectricity. The Alliance Romaine’s point: hydroelectricity isn’t as green as people may think. They’ve got Sierra Club Québec’s support, but the project’s progress hasn’t slowed. Hydro-Québec recently awarded the project’s first major contract to Thirau ltée, a subsidiary of CVTech Group Inc., which started construction this fall.

Romaine is just one of the four projects this public utility has on our list. In fact, our number two project is another one of Hydro-Québec’s hydroelectric stations, this one in the James Bay Territory. Before Romaine got started, the Eastmain-1-A/Sarcelle project along the Rupert River was Quebec’s biggest construction site. This is all part of Hydro-Québec’s $9.1-billion plan to increase annual hydroelectric output by 15.8 terawatt hours (TWh) between 2006 and 2014. After commissioning, the Eastmain-1-A/Sarcelle/Rupert Project will provide 8.5 TWh at a cost of less than five cents per kilowatt hour (kWh).

The proposed changes to Montreal’s Échanger Turcot Interchange (#10).

Quebec’s not the only province that can do hydro—the Wuskwatim Generation Project (number six), located at Taskinigup Falls, about 45 kilometres southwest of Thompson, is the biggest construction project in Manitoba right now. Quebec is also not the only province to experience pushback. In August 2009, protestors from the Nisichawayasihk Cree Nation (NCN) set up a blockade to deny workers access to the Wuskwatim dam site. That dispute was over the lack of NCN members employed at the site. Non-profit environmental organization, Manitoba Wildlands, has also spoken out against the project, saying that neither the project proponents nor the government followed environmental impact statement guidelines, and that only token attention is paid to potential effects from the transmission and roads.

Ontario continues to develop its hydro megaproject in Niagara. The Niagara Tunnel Project was bumped into our Top 10 (from number 14 last year) due to unforeseen challenges with tunnel boring. Big Becky, the massive boring machine digging what will be one of the largest tunnels in North America, has run into some unforeseen geology and is behind schedule. Subsurface rock conditions are different from the baseline established within the design-build contract, causing delays and budget increases. The tunnel’s alignment had to be revised to avoid excavating a softer, red shale knows as Queenston shale.

Despite these difficulties, hydro is still the form of renewable energy making the biggest mark on our list. Other renewables are not as strongly represented as they might have been in our Top 10. While British Columbia’s Naikun Wind Energy Project made number five, an Ontario offshore wind prospect at Lake Erie was cancelled before it began. Canadian Hydro Developers were considering a deal with Wasatch Wind Inc. to acquire a 4,400-megawatt offshore wind project. The project was eligible for the Ontario Green Energy Act’s feed-in-tariff 20-year contract at a price of $190 per megawatt hours. But in a statement, Canadian Hydro said, “Based on the growth opportunities available, offshore wind is not a priority at this time.” It may also have tipped the scales that the company’s potential backer, Australian investment firm Babcock & Brown, is having financial difficulties. The firm is being liquidated by creditors and has sold off its North American wind power division, including St. Joseph Wind Farm in Manitoba (number 20 on our list) to an American investment firm. On top of these struggles, the Canadian Wind Energy Association says tight capital markets and the global recession have made this a less-than-impressive year.

Paul Taylor, president and CEO of B.C.-based NaiKun Wind Energy Group Inc., isn’t worried about the wind market—neither is ENMAX, which has a 50 per cent equity stake in the $2-billion NaiKun Wind Energy Project.

Taylor says, “Wind has had a rough year in B.C. with the clean power call being stalled. But a lot of the issues seem to be cleared away now and the medium to long-term outlook for wind is positive.”

But Taylor says that until government establishes a regime that properly prices carbon, it will be difficult for renewables to compete with more traditional generation projects—one such project appears in our number eight spot: the Keephills 3 Generating Plant. Alberta is taking advantage of new federal funding for carbon capture and sequestration (CCS) projects. Project Pioneer, which would capture and store up to one million tonnes of carbon dioxide per year, will apply for a piece of the $779 million to help make Keephills 3 the world’s first large-scale carbon capture and storage facility. Before Project Pioneer can get underway, work on the plant has to be completed. And part owner Capital Power, formerly Epcor, recently announced a $100-million cost increase and extended construction timeline for the project.

Over half of our Top 10 are energy projects. What makes up the other four? Transit and transportation, of course.

Aside from massive transit investments in Ontario thanks to Toronto Transit Commission (TTC) and Metrolinx projects—and a pile of new federal and provincial funding—transit didn’t make a large impact on our Top 10.

Transportation work, on the other hand, represents $5.56 billion of the investment on our Top 10. Our number ten project is the reconstruction of the Turcot Interchange, a 40-year-old expressway network that snakes around the city like a series of luge tracks. It’s the largest structure of its kind in Quebec, with average traffic in excess of 280,000 vehicles per day. The Ministère des Transports (MTQ) project involves the reconstruction of the Turcot, De La Vérendrye, Angrignon, and Montréal-Ouest interchanges, reducing the number of raised structures and constructing as many sections as possible at ground level or on embankments. The project also calls for the relocation of the railway tracks and Autoroute 20 to the north, toward rue Pullman, opening up former rail yard properties for future development.

Critics, including the Bureau d’audience publiques sur l’environnment (BAPE), have argued that the current plan will encourage car use and increase pollution and greenhouse gas emissions, instead of encouraging public transit. Because this project will have a major impact on how the city functions, work has been postponed until a solid development plan is formed.

Originally the project was meant to be partially financed by private-sector partners, but Montreal Mayor Gérald Tremblay reportedly argued at BAPE hearings that using a P3 strategy would result in restricting the flexibility of the project’s design and execution. In June 2009, Transport Québec announced it won’t pursue a public-private partnership (P3) model for funding the reconstruction project.

Another project that at one time considered the P3 approach, the Port Mann / Highway 1 Project (PMH1), went from number seven on last year’s list to number four this year. The widening of 37 kilometres of highway, including twinning/replacement of the major Port Mann Bridge crossing of the Fraser River,  was listed at $1.6 billion on last year’s Top 100, but Hatch Mott MacDonald has confirmed that the cost is now $2.46 billion.

After being unable to reach a final agreement with Connect BC Development Group, Transportation and Infrastructure Minister Kevin Falcon announced that the Province of British Columbia will move forward with a design-build, fixed-price contract. “We said from the beginning that this was a very challenging capital market environment, and that executing the project would involve complex negotiations,” said Falcon. “We commend Macquarie Group for being able to arrange committed debt and equity for the project through unprecedented turbulence in global markets, and for assembling a first-class team of consortium partners. Unfortunately, the parties could not agree on final terms.” Falcon said Partnerships BC, the provincial body that facilitates P3s, counselled the Province not to proceed.

The new contract signed with Kiewit-Flatiron in March 2009 ensures that cost overruns or construction delays are the responsibility of the contractor, not the Province. Completion is still scheduled for 2013 and MMM Group’s Peter Overton says the project is back on track. “Construction started as we reached just 40 per cent design completion, and we continue to work to an aggressive submission schedule to deliver the effectively completed design by the end of 2010.”

But Overton says design challenges abound, not the least of which is mobilizing and integrating a wider team of 340 staff from 16 firms, each with their own style, into a single cohesive group. Additionally, much of the Lower Mainland is a sensitive aquatic environment. Ground conditions are highly variable, requiring the expertise of three geotechnical firms. Highway widening and new interchanges are being squeezed onto already-occupied land. “Despite early identification of property requirements, acquisition, appeals and negotiations with property owners is an extended process resulting in late scope refinements and impacts on the onshore design,” says Overton.

Ontario’s Windsor-Essex Parkway (number seven) will attempt to do what Port Mann couldn’t: succeed as a P3. This 11-kilometre stretch will connect Highway 401 to the planned Detroit River International Crossing, and ultimately to the U.S. Interstate system. This is a critical link for international trade—the current Windsor crossings account for 28 per cent of Canada’s trade with the United States. The project is in its beginning phases, with a request for proposals about to be released. This is interesting because it’s a departure from Health Care P3s (or AFPs, as they’re called in Ontario), which is what Infrastructure Ontario (IO) has been doing very well—as indicated by the 14 Health Care AFPs on our Top 100 list facilitated by IO.

Another thing you’ll see next year in the Top 10: a ton of TTC projects in Toronto. There are at least three scheduled to start construction in spring 2010. The majority of those health care AFPs will be complete by next year, leaving room for potentially more transportation, or even water and wastewater projects.

Every year, the Top 100 list provides a snapshot of industry trends and investments. For a more comprehensive breakdown of the entire Top 100—distributed as a supplement to this issue—look for our Top 100 report in spring 2010.