This year’s list has the biggest-ever total: $114.2 billion in infrastructure projects. This isn’t all new investment—it includes 71 projects that were on last year’s Top 100. A project remains on this list until it is completed, which means some will continue to rank for a few years, maybe even a decade.

Even so, the 29 new projects added to the list this year represent an additional $30 billion in infrastructure investment in Canada. To put that into perspective, the federal government’s Building Canada plan to help fund infrastructure will invest 
$33 billion over six years.

The sectors in which that new $30 billion is being spent—and the types of projects within those sectors—may provide insight into current and future industry trends.

P3s and high security

New to the list this year, the Communications Security Establishment Canada (CSEC) is responsible for the collection of electronic intelligence to support the defence and foreign policy of the Canadian government, as well as the protection of electronic information and communication.

The project highlights a trend already prevalent in Ontario: the use of public-private partnerships (P3s) to fund high-security projects. In Ontario, every new courthouse is being constructed through a P3 model, usually a design-build-finance-maintain contract. Five of these justice P3s are currently featured on the Top 100. Together, the projects represent $1.8 billion in federal infrastructure spending. In Ontario, secure facilities have a total contract value of $1.6 billion.

The new facility for CSEC (number 35 on the Top 100), a federal project, is being developed using a P3 model, as is the new RCMP E Division Headquarters project (number 32). The new facility will act as the hub for the collection of electronic intelligence by the Canadian government. As such, building security is paramount for ensuring the CSEC can successfully fulfill its role. The use of private contractors for running many of the facilities operations after construction marks the first time that operations and maintenance work will be handled by a private company within a high-security federal facility. The use of private contractors for this project has prompted some CSEC personnel to voice their concerns publicly.

Concerns have mostly been around allowing staff from private companies into high-security sections of the facility. CSEC employees worry that allowing employees from private companies into secure rooms represents a security risk because these people will not have taken the same oaths as CSEC’s full members.

Bidding wars

The replacement of the Montreal subway’s rolling stock, number 11 on this year’s list, has seen its share of problems associated with the procurement process, including an international scandal, the introduction of specific legislation, and a letter from a foreign head of state. The issue began when the Government of Quebec decided that the City of Montreal and the Province did not have to tender this project internationally. This was based on a belief that because Bombardier, who now holds the contract with partner Alstom, are the unique supplier of these types of rail cars in Canada, they are exempt from the requirement to use a bidding process.

While this may be true, it appears that Spain’s Construcciones y Auxiliar de Ferrocarriles and China’s ZhuZhou Locamotive had both expressed interest in bidding on the project. They have repeatedly stated that $2.6 million per car is extraordinarily high—an argument supported by the fact that Bombardier reportedly built subway cars for Chicago’s subway system at $1.5 million per car and has given no justification for the difference in price. Spain’s Prime Minister José Luis Rodríguez Zapatero even wrote a letter to Quebec Premier Jean Charest expressing his displeasure.

The deal has resulted in a new law in Quebec’s National Assembly awarding the contract to the consortium, but there is still the threat of a legal challenge from the two foreign companies seeking access. An interesting aspect of this contract has been the shift in perspective on the part of the Charest government. In the past, Charest has been a proponent for developing new trade agreements to facilitate this type of contract, but now seems to be taking a more protectionist stance in his own province. Despite ZhuZhou’s purchase of industrial land and commitment to building the cars in Canada for almost $1 million less per unit, the Charest government remained committed to purchasing from Bombardier. Whether this decision will result in future problems for Bombardier internationally has yet to be seen.

This issue highlights an important question: how can governments create transparent, independent, and effective bidding processes for large projects? While the process for procuring the subway cars for this project has been seen by many observers as a fumbled approach not to be repeated, other governments, notably the Government of Canada, have recently made transparency a cornerstone of the procurement process.

Recently, the federal government announced the winners of two shipbuilding contracts worth more than $30 billion. The process the government used to facilitate the bidding process drew as much attention as the announcement itself. With three main shipyards (in British Columbia, Nova Scotia, and Quebec) bidding on the contracts, regional politics was set to be a staple of the contracting process.

Hoping to avoid any perception of political interference, the Harper government charged several high-level bureaucrats, along with consulting firm KPMG, with establishing a system free of federal and regional political interference. It involved retaining tight control over the bids submitted and the evaluation system for determining the winners, Nova Scotia and British Columbia, and the loser, Quebec. In structuring the process, the government ensured that ministers would not be allowed to lobby for one bid over another. Moreover, within the system itself, only a very small group of individuals knew which bids were submitted by the three shipyards. During the review process of the bids, most bureaucrats and consultants were unaware of which bid they were reviewing because the bid papers were titled with numbers and not the name of the company involved. This extra step in the process made it easier for the bureaucrats in charge of the process to focus on the merits of the bids without being distracted by political stakeholders.

Pulling rank

The Eglinton Crosstown Light Rail Transit (LRT) Project, once number four on the Top 100, was bumped to number one after an administration change for the City of Toronto led to the cancelation of the Transit City plan. Initially the project was going to cost $4.6 billion. Now, it will cost $8.2 billion, a difference of $3.6 billion (or $360 million per each additional 10 buried kilometres of track). This decision had the added effect of cancelling the other three planned light rail lines under Transit City, which allowed the province to reallocate the funds for these lines to the Eglinton project.

Regional transit authority Metrolinx originally bought four tunnel boring machines (TBMs) for this project, but may need another two to four now that an additional 10 km will be tunnelled. Spacing columnist John Lorinc calls the decision to bury the entire Eglinton line “the single most expensive infrastructure mistake in Toronto history.”

A less obvious consequence of this change is its effect on the engineering associated with a project of this scale. Burying the Eglinton line has one major hurdle to cross before it will be completed: how will the LRT cross the Don Valley? Prior to the change, the Transit City plan had the Eglinton line emerging from a tunnel in the east end of Toronto and continuing on a dedicated right-of-way along Eglinton Avenue and over the Don Valley. But now that all new transit must be tunnelled, the TTC and Metrolinx are confronted with a complex, and potentially very expensive, engineering challenge. Essentially, without a right-of-way there are two options available for this project: bridge or tunnel.

Tunnelling under the Don Valley presents a challenge because of the grade associated with the Valley’s geography, while a bridge could be a potentially very expensive option depending on the outcome of an EA.

More tunnelling also means more soil to dispose of—potentially unsellable soil if it has been contaminated. ReNew Canada met with chief project manager, the Toronto Transit Commission’s (TTC’s) Peter Allibone, and Jack Collins, VP of rapid transit implementation for Metrolinx, at the corner of Black Creek and Eglinton where contractors are already on site, working on the tunnel’s first launch shaft. Collins said the soil at those depths should be clean, and said it’s actually quite easy to find a buyer for excess soil on these types of projects. In fact, they have already sold a portion to the Toronto and Region Conservation Authority for a special project.

While both Allibone and Collins said the original EAs completed for the bulk of the project will remain valid—new EAs will only be done for the additional sections—it’s clear that changes to a project that diverge from a long-term plan create a host of challenges, some of them unforeseen.

Toronto’s decision to change a project that was part of a larger plan for the city raises a complex issue: what effect can local politics have on project development, engineering, and cost? Due to the nature of the Top 100 list (projects remain on the list until they are completed), over the years, other long-term projects have moved up in the ranking due to changes in scope or cost overruns. Still more projects have been removed from the list because funding fell through due, at times, to a change in political administration.

Carbon capture

The Boundary Dam Integrated Carbon Capture and Sequestration (CCS) Demonstration Project will refurbish Unit 3 at the Boundary Dam coal power station. This will be the world’s largest project to use CCS for enhanced oil recovery, with the potential to capture an estimated one million tonnes of carbon dioxide (CO₂) annually.

The largest source of CO₂ in Alberta comes from burning coal for energy generation. Sitting on about 1,000 years worth of cheap energy, Alberta has a pressing desire to develop its coal resources without significantly increasing the resulting CO₂ emissions.

CCS projects are becoming increasingly popular in the prairie provinces. The Top 100 list for 2011 included one CCS pilot—Alberta’s Project Pioneer, the first-ever CCS project to make it onto the Top 100. This year, two more projects made the list.

An abundance of oil in the west, but criticism of the resulting environmental damage, has prompted this surge in investments in the developing technology.

The federal government allocated funding to CCS in its 2008 budget, Alberta has created a $2 billion fund for CCS projects, and SaskPower is investing $1 billion in Boundary Bay (the project cost in total is $1.24 billion, putting it at number 28 on the Top 100).

Saskatchewan sits on about 300 years’ worth of coal reserves. That, along with the low cost of energy produced by coal, is pushing the Province to find new ways to develop this resource without the resulting environmental impact. Adding to their challenge, the federal government recently introduced new regulations surrounding coal power plants. The new regulations mandate that any new facility completed after 2015 must have emissions comparable to a high-efficiency natural gas plant. To meet these regulations, Alberta and Saskatchewan are focusing on developing cost-effective CCS systems.

Money from Alberta’s CCS Fund ($285 million) is being invested in the Swan Hills In-Situ Coal Gasification project (number 19 on this year’s list). The project turns underground coal into gas. Emissions from the project will be captured and piped to nearby oil projects for use in enhanced oil recovery operations.

CCS technology currently remains economically unfeasible, which is why government funding is necessary to move these types of projects forward. Aside from the benefit of sequestering more carbon, projects of this nature are incredibly important for building up the engineering, research, and experience levels of Canadian companies.

The winds of change

At a cost of between $750 million and $900 million, the K2 Wind Project is the first of its kind to break into the top 40. Wind projects of this scale are becoming increasingly common (see “Wind Development in the Top 100”, page 18).

Across Canada, individual provinces are pursuing renewable energy through different mechanisms. Ontario is using a Feed-in Tariff program to encourage the development of renewable energy sources, such as wind. In Alberta, where the energy market is unregulated, wind companies are using innovative methods to ensure their projects are economically viable. Greengate Power Corporation is bringing additional revenue for its project, Blackspring Ridge I (number 55 on the Top 100), by providing renewable energy credits to a California-based utility, Pacific Gas & Electric.

Many new wind projects grace this year’s Top 100 list, and even more such as the 366-megawatt Seigneurie de Beaupre Wind Farm in Quebec, are expected to be on next year’s list.

Nuclear: beyond generation

The Port Hope Area Initiative (PHAI) may have only narrowly made the list this year (at $260 million, it’s number 97 on the Top 100) but it is no less significant. The first project of its kind to appear in this report, it is dedicated to the clean-up and long-term management of historic low-level radioactive waste in the Ontario municipalities of Port Hope and Clarington. The project is a joint effort led by Natural Resources Canada in partnership with Atomic Energy of Canada and Public Works and Government Services Canada.

Low-level radioactive waste in Canada is an ongoing, expensive issue. Canada has a long history of mining and refining radioactive minerals. But, similar to the history of most mining industries in Canada, safety and environmental monitoring practices have changed substantially over the decades. The Port Hope and Port Granby projects reflect the increased awareness of the public risks from a long history of refining radioactive products in the area.

The Port Hope area has been managing low-level radioactive waste since radium was first refined in the area in 1932, followed by uranium refinement in the 1940s and 1950s. Removing contaminated waste from the area began in the mid-1970s with the transfer of over 100,000 tonnes of contaminated soil from Port Hope to Chalk River Laboratories. It wasn’t until the federal government established the Low Level Radioactive Waste Management Office (LLRWMO) in 1982 that a national long-term clean-up plan was put into motion.

As part of that plan, the LLRWMO tried to find a community willing to host a waste management facility. When that didn’t happen, the Township of Hope agreed to store the waste locally and the PHAI was born. There are two distinct projects under the initiative: the Port Hope Project and Port Granby Project. Long-term waste storage facilities will be built at each location and will be designed to contain the waste for hundreds of years. To hold the waste, a mound consisting of more than twenty above- and below-ground layers will be constructed, with the contaminated soil housed in the centre of the mound.

In nuclear energy generation, facility owners typically deal with radioactive waste, paying to store it on site, or at another facility’s site. In this situation, the company responsible for refining the mined uranium from the 1930s to 1970s, Eldorado, is no longer in operation. “You can’t get blood from a stone,” says Mark Giles with the PHAI. “Those responsible for waste are normally held accountable for cleaning it up, unless that company no longer exists. The Government of Canada took on the responsibility—it was, after all, a crown corporation.” The company was originally privately owned, but the federal government purchased it in the 1970s.

Projects to manage low-level radioactive waste have been conducted since the 1980s in locations across Canada, mostly in the west and northwest. But this is the largest such operation ever to be undertaken.

Record investment

These are just a few of the trends and notable projects based on almost a year of research and interviews on the part of a team dedicated to Canada’s infrastructure industry. A more thorough breakdown, by sector and sub-sector, including details on funding sources, can be found in this year’s Top 100 report, which was circulated with this issue.

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.