Construction Economist - Spring 2023

BRITISH COLUMBIA • PRAIRIES AND NORTHWEST TERRITORIES • ONTARIO • QUÉBEC• MARITIMES • NEWFOUNDLAND AND LABRADOR

CONSTRUCTION ECONOMIST

Canada’s Leading Journal in Construction Economics

SPRING 2023

The Journal of the Canadian Institute of Quantity Surveyors | Le Journal de l’Institut canadien des économistes en construction

CIQS on Tap for Another Recordbreaking Year

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CONSTRUCTION ECONOMIST SPRING 2023

The Journal of the Canadian Institute of Quantity Surveyors Le Journal de l’Institut canadien des économistes en construction

The mission of CIQS is to promote and advance professional quantity surveying and construction estimating; to establish and maintain national standards; to recruit, educate and support our members.

Canadian Institute of Quantity Surveyors 90 Nolan Court, Unit 19, Markham, ON L3R 4L9 t. 905/477.0008 f. 905/477.6774 toll free. +1 866/345.1168 info@ciqs.org www.ciqs.org www.ciqs.org/congress CIQS Editorial Team

Features In Memoriam .........................................................................15

Chief Executive Officer Sheila Lennon, CAE ceo@ciqs.org

Assistant Editors Ajibola Soboyejo, PQS Shane McKernan, PQS

Managing Editor Arif Ghaffur, PQS(F) aghaffur@ciqs.org

Article Administration/ Author Liaison Kelsey Wright, Member Services Coordinator, CIQS memberservices@ciqs.org

Editor Chris Court, PQS(F) editor@ciqs.org

The Climate Policies in Canada: Past, present and future...............................................................18

Send Change of Address to: memberservices@ciqs.org

Advocacy to Support Future Generations..............................23

Board of Directors Chair: Arif Ghaffur, PQS(F)

Global Uncertainty & Impacts on Canada

Interest rate hikes & construction materials price volatility....................25

Wire, PVC, Oil and Transportation – Cost Volatility: Magnitude & trends.....................................................................26

Jack Chen, PQS Antoine Aurelis, PQS Dominic Leadsom, PQS Ajibola Soboyejo, PQS Advisor: Roy Lewis, PQS(F) Observer, International Relations: David Dooks, PQS(F) Observer, YQS: Mykola Pulnyev, PQS

Vice-Chair: Tammy Stockley, PQS(F) Past Chair: Erin Brownlow, PQS(F) Education Director: Adam Ding, PQS Director Hiran Dassoruth, PQS

Statements of fact and opinion contained within this journal are those of the authors, including subject matter experts. CIQS assumes no responsibility or liability for the content of such fact and opinion, nor do they represent the official policy of CIQS. Published four times a year on behalf of the Canadian Institute of Quantity Surveyors.

Publisher Michael Bell michaelb@mediaedge.ca

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Corners Prompt Payment Corner..... 21

Messages Chair’s Message............... 5

Education Corner............... 16

CEO’s Message................ 8

Young Quantity Surveyor Corner................. 17

Editor’s Message............ 11

531 Marion Street Winnipeg, MB Canada R2J 0J9 Toll Free: 1-866-201-3096 Fax: 204-480-4420 www.mediaedgepublishing.com President Kevin Brown kevinb@mediaedge.ca Senior Vice-President Robert Thompson robertt@mediaedge.ca

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Chair’s Message

Quantity Surveying & Estimating

Proceeding towards professional excellence Arif Ghaffur, PQS(F)

D

uring the preparation of the CIQS strategic plan in 2022, the CIQS Board and CEO agreed that the Institute was seeking to elevate itself as a professional organization. Further, it was agreed that the CIQS is well-positioned to build on the progress of previous years, and it is time to take the next step.

The CIQS strategic plan covering the period 2022-2025 includes wide-ranging initiatives, as I set out in the fall 2022 edition of Construction Economist. The overall aim is to solidify and develop new initiatives that promote quantity surveying and estimating as professions of choice.

The scene was set for the CIQS to take the important step of elevating the profession. In pursuing this agenda and achieving outcome objectives, it is important to understand the scope of the services provided by the CIQS designations:

• Professional Quantity Surveyor (PQS) • Construction Estimator Certified (CEC) Each CIQS member (PQS/ECA, CEC/ECC) is signatory to a licensing agreement that is subject to annual renewal and good standing. In executing the licensing agreement, each member receives license to use (during the term of the licence) and CIQS designations in association with the services set out in the agreement, including but not necessarily limited to: • Perform the services in accordance with the National Standards established by the CIQS and associated documents as may be amended and updated.

• Comply with all CIQS bylaws, rules, regulations and directives as published and amended from time to time by the CIQS including, without limitation, the National Standards.

• D o all things and execute all documents, to secure and protect CIQS rights, title and interest in the CIQS Marks and Designations.

• The CIQS grants a limited, revocable, non­exclusive, unassignable and non­sublicensable licence to display the Canadian Institute of Quantity Surveyors, CIQS and CIQS & Design marks in Canada (“CIQS Marks”).

• Any and all use of the CIQS Marks and Designations by the members, including all goodwill appertaining thereto, inure to the sole benefit of the CIQS. • The CIQS Marks and Designations are to be used in accordance with the CIQS brand use guidelines and requirements, as amended from time to time.

Such scope of services is subject to an annual selfcertification of continuing professional development (CPD).

The overall aim is to identify and understand the scope that members are expected to deliver and to ensure that these remain relevant and current with the supplementation of CPD. Further, each CIQS member is signatory to an agreement that is subject to annual renewal and good standing. In executing the agreement, each CIQS member may provide services that comply with all CIQS bylaws, rules, regulations and directives as published and amended from time to time by the CIQS including, without limitation, the National Standards.

Recognizing that there is no government legislation regulating our profession, in having members provide services in line with the licensing agreement and in being a self-regulated professional body, the CIQS continues to provide members with the comfort that the expectations of membership are adhered to. This is in addition to providing the public with the assurance that CIQS members are upholding professional standards. Such comfort and assurances recognize the CIQS National Standards www.ciqs.org | SPRING 2023 | CONSTRUCTION ECONOMIST

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Chair’s Message

and Bylaws as the baseline documents for the Institute to transact its obligations to its internal and external stakeholders.

I was recently asked about the relevance of these baseline documents. The purpose of the National Standards is to ensure that each individual holding a designation issued by the CIQS upholds a consistent set of standards and ethics. The CIQS Bylaws are established so as to regulate the Institute, with both the National Standards and the Bylaws being subject to update by the CIQS Board. The Bylaws include sections on Interpretation, General; Members; Meetings of Members; Directors; Chapters; Committees; Meetings of Directors; Officers; Conflict of Interest; Protection of Directors; Officers and Others; Notices; Dispute Resolution; etc.

To solidify the profession and the CIQS’s obligation to its members and the public, the CEO’s office has launched initiatives that ensure that the CIQS governance is adhered to. Now required, are member self-declarations of good character for both an application for membership and annual membership renewal. These checks and balances are aimed at elevating the profession even further, consistent with the CIQS 2022 strategic plan.

I look forward to seeing you in June at the 2023 CIQS Congress in Calgary, Alta. In the interim, I hope that you and your families have an enjoyable spring and I wish you all the best for the months ahead.

Respectfully submitted, Arif Ghaffur, PQS (F) Chair, CIQS

L’économie en construction et l’estimation Sur le chemin de l’excellence professionnelle

L

ors de la préparation du plan stratégique de l’ICÉC en 2022, le conseil d’administration et la directrice générale de l’ICÉC ont convenu que l’Institut allait chercher à s’élever en tant qu’organisation professionnelle. En outre, il a été convenu que l’ICÉC est bien placé pour tirer parti des progrès des années précédentes et qu’il est temps de passer à l’étape suivante.

Le plan stratégique de l’ICÉC couvrant la période 2022-2025 comprend des initiatives de grande envergure, comme je l’ai exposé dans le numéro d’automne 2022 du Construction Economist.

L’objectif global est de consolider et de développer de nouvelles initiatives visant à promouvoir l’économie en construction et l’estimation en tant que professions de choix.

Tout est en place pour permettre à l’ICÉC de prendre la décision importante d’élever la profession. Pour poursuivre ce programme et atteindre les objectifs de résultats, il est important de comprendre la portée des services fournis par les titres de l’ICÉC :

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CONSTRUCTION ECONOMIST | SPRING 2023 | www.ciqs.org

• É CONOMISTE EN CONSTRUCTION AGRÉÉ (ÉCA) • E STIMATEUR EN CONSTRUCTION CERTIFIÉ (ECC) Chaque membre de l’ICÉC (ÉCA/PQS, ECC/CEC) est signataire d’un contrat de licence soumis à un renouvellement annuel et à l’obligation de rester en règle. Après avoir signé l’accord de licence, chaque membre reçoit une licence pour utiliser (pendant la durée de la licence) les titres de l’ICÉC en lien avec les services énoncés dans l’accord, y compris mais sans nécessairement s’y limiter : • L ’exécution des services conformément aux normes nationales établies par l’ICÉC et aux documents associés, tels qu’ils peuvent être modifiés et mis à jour; • L a conformité à tous les statuts, règles, règlements et directives de l’ICÉC tels que publiés et modifiés de temps à autre par l’ICÉC, y compris, sans s’y limiter, les normes nationales; • L a mise en œuvre de toutes les mesures et l’exécution de tous les documents, afin d’assurer et de protéger les droits, titres et intérêts de l’ICÉC dans les marques et désignations de l’ICÉC;

Chair’s Message

• L ’ICÉC accorde une licence limitée, révocable, non exclusive, incessible et sans possibilité de sous-licence pour afficher les marques de l’INSTITUT CANADIEN DES ÉCONOMISTES EN CONSTRUCTION, ICÉC, ainsi que la marque ICÉC et ses dessins de marque au Canada (les « marques de l’ICÉC »); • T oute utilisation des marques et des titres de l’ICÉC par les membres, y compris tout achalandage qui s’y rattache, est au seul bénéfice de l’ICÉC; • L es marques et titres de l’ICÉC doivent être utilisés conformément aux directives et aux exigences d’utilisation de la marque ICÉC, telles que modifiées de temps à autre.

Cette gamme de services est soumise à une autocertification annuelle de développement professionnel continu (DPC). L’objectif global est d’identifier et de comprendre l’ensemble des services que les membres sont censés fournir et de s’assurer que ces services restent pertinents et à jour en rajoutant la DPC. Par ailleurs, chaque membre de l’ICÉC est signataire d’un contrat qui est soumis à un renouvellement annuel et à l’obligation de rester en règle. En concluant cet accord, chaque membre de l’ICÉC peut fournir des services qui sont conformes à tous les statuts, règles, règlements et directives de l’ICÉC tels que publiés et modifiés de temps à autre par l’ICÉC, y compris, sans s’y limiter, les normes nationales.

les réunions des membres, les administrateurs, les chapitres, les comités, les réunions des administrateurs, les dirigeants, les conflits d’intérêts, la protection des administrateurs, des dirigeants et autres, les avis, le règlement des différends, etc.

Pour renforcer la profession et l’obligation de l’ICÉC envers ses membres et le public, le bureau de la directrice générale a lancé des initiatives qui garantissent le respect de la gouvernance de l’ICÉC. Désormais, l’autodéclaration de bonne moralité des membres est requise tant pour la première demande d’adhésion que pour le renouvellement annuel de l’adhésion. Ces freins et contrepoids visent à élever la profession encore plus haut, conformément au plan stratégique de l’ICÉC de 2022.

Je me réjouis de vous voir en juin au congrès 2023 de l’ICÉC à Calgary, en Alberta. En attendant, j’espère que vous et vos familles allez passer un agréable printemps et je vous souhaite le meilleur pour les mois à venir.

Salutations respectueuses, Arif Ghaffur, ÉCA (F) Président – ICÉC

L’ICÉC reconnaît qu’il n’y a pas de législation gouvernementale qui régit notre profession. Ainsi, en obligeant les membres à fournir des services en accord avec le contrat de licence et en étant un organisme professionnel autoréglementé, l’ICÉC continue à rassurer les membres du respect de ses obligations.

En outre, le public a l’assurance que les membres de l’ICÉC respectent les normes professionnelles. Ce respect et ces assurances reconnaissent les normes nationales et les règlements de l’ICÉC comme les documents de référence permettant à l’Institut de remplir ses obligations envers ses parties prenantes internes et externes.

On m’a récemment demandé quelle était la pertinence de ces documents de référence. L’objectif des normes nationales est de s’assurer que chaque personne détenant un titre délivré par l’ICÉC respecte un ensemble cohérent de normes et d’éthique.

Le règlement de l’ICÉC est établi de manière à réglementer l’institut, et les normes nationales et les règlements font l’objet de mises à jour par le conseil de l’ICÉC. Le règlement comprend des sections sur l’interprétation, les généralités, les membres, www.ciqs.org | SPRING 2023 | CONSTRUCTION ECONOMIST

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CEO’s Message

CIQS On Tap for Another Record-breaking Year Sheila Lennon, CAE

I

would like to begin by thanking everyone who has supported the CIQS over the past year: members, stakeholders, sponsors, advertisers and speakers at our events. With your support and the extremely hard work of our staff and volunteers, the 2022-2023 membership year turned out to be record-breaking!

Accomplishment Highlights

1. Our membership grew to 2,193 members, of which 1,127 are Professional Quantity Surveyors (PQS), and 507 are Construction Economist Certified (CEC).

2. Ottawa’s Congress 2022 had the highest number of registrants in over a decade.

3. At Congress 2022, the CIQS hosted its first ever hybrid Annual General Meeting, with 599 members participating via either live vote or proxy. This is the best attendance of any AGM in CIQS history!

4. As reported in the last issue of Construction Economist, the CIQS hosted its first-ever Day on the Hill in Ottawa in November 2022 to raise awareness of the quantity surveying profession and demonstrate that our members are an integral part of construction projects throughout the entire lifecycle. The day included 17 meetings and a reception in the Valour Building on Parliament Hill.

5. CIQS’s social media platforms continue to increase their reach. The LinkedIn page attained 806 followers between February 6, 2022, and February 5, 2023. During that same time, it gained a total of 3,545 engagements (reactions, comments and reposts) on 81 posts. The CIQS ran a Twitter campaign in collaboration with IMPACT Public Affairs leading up to and directly following the CIQS Day-on-the-Hill. In total, there were 47 posts which gained 2,650 profile visits. Stay in the know as events happen – follow the CIQS on LinkedIn and Twitter.

Why Has the Renewal Application Changed?

The CIQS is a self-regulatory professional body – the gatekeeper of ethics and standards for construction and infrastructure economics in Canada. One of our primary

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CONSTRUCTION ECONOMIST | SPRING 2023 | www.ciqs.org

mandates is the protection of the public. To fulfill that mandate and to instill and maintain public confidence in the PQS and CEC designations, we now require members to self-report information that may have an impact on their integrity. The new declarations in the renewal application are designed to provide information to the CIQS relating to, for example, criminal charges and convictions, declarations of bankruptcy and findings of misconduct by, and notices of pending complaints from, another regulatory body. Provision of this information is not necessarily a bar to renewal, however, receipt of this information enables the CIQS to consider whether an investigation is warranted. Failure to provide this information could lead to an investigation and discipline.1 Most regulators in Canada employ a similar reporting requirement for their members. In amending our renewal application, the CIQS is now in line with almost every other regulator in Canada.

What Is on the Horizon at the CIQS? Advocacy We are building on the momentum we gained on our advocacy initiatives last year by planning a mini Day on the Hill in Ottawa in late spring, followed by a full Day on the Hill and reception in October 2023.

In the coming months, we will be launching additional PushPolitics campaigns. When a new campaign is online, please take a few minutes to visit our PushPolitics website www.count-on-us.org to send a letter to your MP. The greater the number of members who participate in these campaigns, the stronger the CIQS’s voice is heard.

External Relations Committee We recently welcomed new members to the External Relations Committee (ERC), which is led by Tammy Stockley, PQS(F). The ERC is responsible for reaching out to potential stakeholders to build relationships that nurture the CIQS mission and vision within the industry.

CEO’s Message Congress 2023 Is Heading to Calgary, Alberta This year’s Congress will be held at the Hyatt Regency Calgary on June 22-24. We received more presentation proposals than there are spots available in the program, causing the selection committee to have to make some difficult choices when scheduling this year’s program. If you have never attended an annual Congress, this is the year to go! Check out the Congress 2023 story in this issue for event details.

Certification Platform In 2023, the CIQS will be launching a specialized learning platform via TopClass LMS by WBT Systems. This is an engaging and comprehensive platform that will allow the CIQS to offer high-quality, online educational and certification programs to our members.

LinkedIn

Twitter

Welcome MediaEdge!

It is my pleasure to officially welcome MediaEdge Publishing as the new publisher of the Construction Economist. We are very pleased to be working with their entire team, from production to sales. Advertising rates and artwork specs are included in the new media planner, which is available on our website under News. Advertisers can also reach out directly to the MediaEdge sales team (see the masthead in this issue for their contact information).

Finally, thank you to everyone who has renewed their membership for 2023-2024. You, our members, are the backbone of the Institute and your continued support of everything we do is appreciated. I hope to see you at chapter events, Congress, and/or one of our educational webinars in the coming year. Together, we are the voice for Canada’s construction economists.

1

For example:

Regulated Health Professions Act, 1991, S.O. 1991, c.

18 (ontario.ca) Sections 85.6.1 – 85.6.4 of the Health Professions Procedural Code (Schedule 2 to the RHPA) By-Law 8 | Law Society of Ontario (lso.ca) Standards of Professional Responsibility - Effective May 2022 (fpcanada.ca) s. 33 Canada Gazette, Part 2, Volume 156, Number 13: Code of Professional Conduct for College of Immigration and Citizenship Consultants Licensees s. 39

L’ICÉC en passe de connaître une nouvelle année record

J

e tiens tout d’abord à remercier tous ceux et celles qui ont soutenu l’ICÉC au cours de cette dernière année : les membres, les intervenants, les commanditaires, les annonceurs et les conférenciers à nos événements. Grâce à votre soutien et au travail extrêmement rigoureux de notre personnel et de nos bénévoles, l’année d’adhésion 2022-2023 s’est avérée être une année record!

Principales réalisations

1. N ous comptons à présent 2 193 membres, dont 1 127 économistes en construction agréés (ÉCA) et 507 estimateurs en construction certifiés (ECC).

2. L e Congrès d’Ottawa en 2022 a enregistré le plus grand nombre d’inscriptions depuis plus de dix ans.

3. L ors du Congrès de 2022, l’ICÉC a organisé sa toute

première assemblée générale annuelle hybride, à laquelle 599 membres ont participé par vote en direct ou par procuration. Il s’agit de la meilleure participation à une AGA de l’histoire de l’ICÉC! 4. C omme nous l’avons signalé dans le dernier numéro du Construction Economist, l’ICÉC a organisé sa toute première Journée sur la Colline à Ottawa en novembre 2022 afin de faire connaître la profession de l’économie en construction et de démontrer que nos membres font partie intégrante des projets de construction, tout au long de leur cycle de vie. La journée comprenait 17 réunions et une réception dans le bâtiment Valour sur la Colline du Parlement.

5. Les plateformes de médias sociaux de l’ICÉC continuent d’accroître leur portée. La page LinkedIn a atteint les 806 abonnés entre le 6 février 2022 et le 5 février www.ciqs.org | SPRING 2023 | CONSTRUCTION ECONOMIST

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CEO’s Message 2023. Pendant cette même période, elle a obtenu un engagement total de 3 545 (réactions, commentaires et articles rediffusés) sur 81 publications. L’ICÉC a mené une campagne sur Twitter en collaboration avec IMPACT Affaires Publiques, qui a précédé et directement suivi la Journée sur la Colline de l’ICÉC. Au total, il y a eu 47 publications, qui ont généré 2 650 visites de profil.

Restez au courant des événements. Suivez l’ICÉC sur LinkedIn et Twitter.

Pourquoi changer la procédure de renouvellement?

L’ICÉC est un organisme professionnel d’autoréglementation et le gardien de l’éthique et des normes pour l’économie de la construction et des infrastructures au Canada. L’un de nos principaux mandats est la protection du public. Afin de remplir ce mandat et d’inspirer et de maintenir la confiance du public dans les titres d’ÉCA et d’ECC, nous demandons maintenant aux membres de déclarer eux-mêmes les informations qui peuvent avoir un impact sur leur intégrité. Les nouvelles déclarations dans la demande de renouvellement sont conçues pour communiquer des informations à l’ICÉC concernant, par exemple, les accusations et les condamnations criminelles, les déclarations de faillite, les constatations de mauvaise conduite par un autre organisme de réglementation et les avis de plaintes en cours de traitement par cet organisme. La communication de ces informations ne pose pas automatiquement obstacle au renouvellement; toutefois, la réception de ces informations permet à l’ICÉC de déterminer si elle doit lancer une enquête.

Le fait de ne pas fournir ces informations peut donner lieu à une enquête et à des mesures disciplinaires. La plupart des organismes de réglementation au Canada imposent une obligation de déclaration similaire à leurs membres. En modifiant notre demande de renouvellement, l’ICÉC s’aligne désormais sur presque tous les autres organismes de réglementation au Canada.

Qu’est-ce qui s’annonce chez l’ICÉC? La sensibilisation Nous continuons sur la lancée de nos initiatives de sensibilisation de l’année dernière, en prévoyant une miniJournée sur la Colline à Ottawa, à la fin du printemps, suivie d’une Journée sur la Colline complète et d’une réception en octobre 2023.

Dans les mois à venir, nous lancerons d’autres campagnes Push Politics. Lorsqu’une nouvelle campagne est en ligne, 1

veuillez prendre quelques minutes pour visiter notre site Web Push Politics (www.count-on-us.org) pour envoyer une lettre à votre député. Plus le nombre de membres qui participent à ces campagnes est important, plus la voix de l’ICÉC est entendue.

Comité des relations extérieures Nous avons récemment accueilli de nouveaux membres au sein du Comité des relations extérieures (CRE), qui est dirigé par Tammy Stockley, ÉCA(F). Le CRE est chargé d’aller à la rencontre des parties prenantes potentielles pour établir des relations qui renforcent la mission et la vision de l’ICÉC au sein du secteur.

Le Congrès 2023 se rend à Calgary, en Alberta Le congrès de cette année se tiendra au Hyatt Regency Calgary du 22au24 juin. Nous avons reçu plus de propositions de présentation qu’il n’y a de places disponibles dans le programme, ce qui a obligé le comité de sélection à faire des choix difficiles lors de la programmation de cette année. Si vous n’avez jamais participé à un congrès annuel, c’est l’année où il faut y aller! Consultez l’article sur le Congrès de 2023 dans ce numéro pour connaître les détails de l’événement.

Plateforme de certification En 2023, l’ICÉC lancera une plateforme d’apprentissage spécialisée sur le système TopClass LMS de WBT Systems. Il s’agit d’une plateforme engageante et complète qui permettra à l’ICÉC d’offrir à ses membres des programmes éducatifs et des certifications en ligne de grande qualité.

Bienvenue à MediaEdge!

J’ai le plaisir d’accueillir officiellement MediaEdge Publications en tant que nouvel éditeur du Construction Economist.

Nous sommes très heureux de travailler avec toute leur équipe, de la production aux ventes. Les tarifs publicitaires et les spécifications des illustrations sont disponibles dans le nouveau Plan média, sur notre site Web sous la rubrique «Actualités ». Les annonceurs peuvent également s’adresser directement à l’équipe de vente de MediaEdge (leurs coordonnées figurent dans l’en-tête de ce numéro).

Enfin, merci à tous ceux qui ont renouvelé leur adhésion pour 2023-2024. Vous, nos membres, êtes un pilier de l’Institut, et le soutien continu que vous apportez à nos efforts est apprécié.

J’espère vous voir à un événement de chapitre, au Congrès, et/ou à l’un de nos webinaires éducatifs au cours de l’année à venir. Ensemble, nous sommes la voix des économistes en construction du Canada!

Par exemple :

Loi de 1991 sur les professions de la santé réglementées, L.O. 1991, c. 18 (ontario.ca) sections 85.6.1 à 85.6.4 du Code des professions de la santé (annexe 2 de la LPSR) Règlement administratif no 8 | Barreau de l’Ontario (lso.ca) Normes de responsabilité professionnelle —En vigueur depuis mai 2022 (fpcanada.ca) s. 33 Gazette du Canada, Partie II, volume 156, numéro 13 : Code de déontologie des titulaires de permis du Collège des consultants en immigration et en citoyenneté s. 39

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CCDC 5A versus CCDC 5B –

Editor’s Message

Benefits of Each Contract

I

Chris Court, PQS(F)

n 2022, I focused my Editor’s Messages on the general topic of housing and, more specifically, on the hot topics of housing affordability, inflation and the housing industry, potential solutions to the housing crisis and the importance of inclusive zoning policies in high-density areas. With this issue, I would like to shift gears away from housing affordability and discuss the form of project delivery structure and contracts that are most commonly adopted by condominium developers. I should mention that my perspective remains anchored in the high-rise residential construction sector because that is my sector of expertise.

Over the years, the Construction Economist has published commentary by lawyer contributors about various forms of construction contracts, their intended uses and their specific benefits and pitfalls. The most recent example was a detailed review of Alliance Agreements by Joshua Strub in our Spring 2022 issue. My intention here is to share my real-time observations about residential high-rise projects built under a construction management structure, and to compare and contrast between CCDC 5A and CCDC 5B projects.

conducive to true collaboration between owner and construction manager. Specifically, on most of my past and current projects, I have noticed the following: • A lignment of owner’s and construction manager’s interests.

• F ull transparency between owner and construction manager over budget, schedule and project administration, and records.

• S ignificant owner decision control over all aspects of the project with the safety net of the construction manager’s knowledge, experience, and industry relationships.

• W here the construction management fee is calculated based on a percentage of the actual cost of construction, plus a percentage of any savings realized against the construction contingency, the construction manager has a significant incentive to ensure construction stays within budget (and within schedule).

Since my focus has been high-rise residential construction for most of my career, I have had the opportunity to work with multiple construction managers, general contractors and developers/ owners. During my employment with consulting firms, a developer and a construction manager, I noticed that most of the construction management companies were working with the owner under the CCDC 5A contract. The first project on which I worked – which involved a CCDC 5B contract with a Guaranteed Maximum Price (GMP) between a developer and a construction manager/ general contractor – was for the construction of a multiple-tower development. The developer had locked in unit rates with multiple trade contractors so their costs for major divisions were known before the GMP contract was signed.

• T his fee structure also eliminates an incentive for the construction manager to issue change orders on its own behalf (as change orders would deplete the contingency).

The Canadian Construction Documents Committee (CCDC) defines the CCDC 5A – 2010 Construction Management Contract – for Services as follows:

• P ractically non-existent adversarial tensions among the project team members.

“CCDC 5A – 2010 Construction Management Contract – for Services is a standard contract between owner and construction manager for which the work is to be performed by trade contractors. The construction manager acts as a limited agent of the owner providing advisory service and administering and overseeing the contracts between the owner and trade contractors.”1 A CCDC 5A model, with negotiated supplementary conditions tailored to the requirements of the specific project, is often

• T rades contract directly with the owner, but the construction manager administers them and negotiates prices with them on behalf of the owner to make sure awarded contracts remain within budget.

• T he construction manager monitors and enforces the schedule in the best interest of the owner and the project.

The Canadian Construction Documents Committee (CCDC) defines the CCDC 5B – 2010 Construction Management Contract – for Services and Construction as: “CCDC 5B – 2010 Construction Management Contract – for Services and Construction is a standard contract between owner and construction manager to provide advisory services during the pre-construction phase and perform the required work during the construction phase. At the outset, the work is performed on an actual-cost basis, plus a percentage or fixed fee which is applied to actual www.ciqs.org | SPRING 2023 | CONSTRUCTION ECONOMIST

11

Editor’s Message costs. The parties may agree to exercise the following options: Guaranteed Maximum Price (GMP), GMP Plus Percentage Cost Savings, and conversion to a Stipulated Price Contract.”2

• T he interests of the owner and the construction manager are often polarized around the schedule (and resulting delay claims by the construction manager) or budget (with construction manager change orders).

A CCDC 5B notably provides the owner with certainty of cost and schedule – or at least that is the intent.

Specifically, on past projects that involved a CCDC 5B, I have noticed the following:

In my experience, both contracts have their pros and cons for both the owner/developer and the construction manager. I am interested to see what the future holds with the cost uncertainty that our industry is facing right now. The industry is seeing more trade contractors coming back after the contract has been signed and the project is under construction, requesting the approval of cost increases due to unprecedented supplier and subcontractor cost escalations. Under a CCDC 5A contract, the construction manager will advise the owner in real time so these increases will not come as a surprise later in the project. The construction manager will work with the owner to find solutions. Will more owners/developers request the CCDC 5B to pass the risk to the construction manager, or will they continue working with a CCDC 5A contract?

• T he construction management fee is fixed based on the agreed scope and budget. If the scope remains unchanged, the owner has cost certainty and the construction manager is not entitled to additional fees.

• T he schedule is typically also fixed and the risk of delays – other than delays caused by the owner or by force majeure events (if such a clause is agreed on) – is the construction manager’s risk.

• T he construction manager is the single point of responsibility for all the construction work; it contracts with the trade contractors, therefore taking any resulting liability and shielding the owner from that liability.

If you have feedback, suggestions and of course any articles that you would like to be considered for publication, please email editor@ciqs.org or ceo@ciqs.org.

Chris Court, PQS (F) Editor

CCDC 5A - 2010 Construction Management Contract – for Services definition.

Retrieved from https://www.ccdc.org/document/ccdc5a/.

2 CCDC 5B – 2010 Construction Management Contract – for Services and Construction definition.

Retrieved from https://www.ccdc.org/document/ccdc5b/.

1

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knowledge knowledge exchange exchange knowledge knowledge exchange exchange knowledge knowledge exchange exchange opportunity opportunity create create opportunity opportunity create create opportunity opportunity create create innovation innovation inspire inspire innovation innovation inspire inspire innovation innovation inspire inspire

Advertorial

Building Permits: An Overview of Processes and Practices in Ontario Building permits are a lynchpin of construction and development across Canada. Put simply, the issuance or refusal of a building permit can have serious implications for a project. Any unplanned delay in permit issuance creates additional project risks, including increased financing and labour and material costs. The ability to obtain a permit, and the corresponding decision to issue a permit, thus carry significant weight for a project.

municipality. The negotiation and enforcement of a CP agreement, particularly if site restoration is required, is costly to the municipality. Challenges to a CBO’s decision can also result in costly and lengthy legal proceedings. It is therefore understandable that CBOs can sometimes be reticent to use their authority to issue CPs or may choose to restrict their exercise of authority (e.g., issue belowgrade CPs only).

As permitting processes and practices vary between provinces and municipalities, this article focuses on Ontario.

As part of good project planning, the authors recommend establishing an early relationship and good rapport with the relevant CBO to understand their approach to the issuance of permits and to work collaboratively toward permit issuance.

Requirement to Issue Building Permits in Ontario

In Ontario, the responsibility for issuing building permits (hereinafter, “permits”) lays with each municipality’s Chief Building Official (“CBO”) by virtue of provincial legislation: the Building Code Act, 1992 (the “Act”) and the Ontario Building Code (“OBC”).

The Act governs when a CBO can approve or refuse a full, partial or conditional permit. The CBO must issue a permit where certain enumerated criteria under the Act have been met, including that the proposed construction satisfies all “applicable law.” A permit can be issued in phases to reflect stages of construction (e.g., shoring, excavation, foundation, structural) or as a full permit.

The OBC sets out a non-exhaustive list of what constitutes “applicable law” (e.g., certain provisions under the Planning Act respecting control of land use and subdivision). The courts have further interpreted this list; for instance, while site plan approvals constitute “applicable law” subdivision agreements do not. Satisfaction of all “applicable law” is often not a straightforward or speedy endeavour, and typically involves engaging a host of other authorities and processes. Indeed, one of the main questions a CBO faces in exercising their authority to issue permits is whether all “applicable law” has been satisfied. This can be difficult for the CBO and the courts to determine.

“Partial” (or “phased”) permitting (as distinct from conditional permitting) can be one means of proceeding with the project while concurrently advancing other required processes. For example, in the case of Vandenheede Farms Ltd. v. Norfolk (County), the applicant owned a property zoned for agricultural purposes and filed a rezoning application to permit a craft brewery. Vandenheede applied for a partial permit to construct building “shells” only, and advised the CBO that if their rezoning was denied, they would simply use the buildings for permitted uses. The CBO granted the partial permit. The neighbouring owners appealed the CBO’s decision, claiming it was in contravention of “applicable law” (namely, the existing zoning). The Court dismissed the appeal, concluding that it was entirely appropriate for the CBO to take into consideration “all other relevant circumstances” in granting the partial permit.

While the rezoning application was a relevant consideration, it did not prevent the CBO’s exercise of their discretion. The applicant could comply with “applicable law” notwithstanding a possible refusal of its rezoning application.

Disputes Relating to the CBO’s Decision to Issue or Refuse a Permit

The CBO’s decision to issue, refuse or revoke a permit can be a cause of dispute between various parties with an interest in the project, including the applicant, neighbouring landowners or occupants and interested environmental groups.

The Act provides for an expeditious resolution process for certain disputes through the Building Code Commission, most notably where a CBO has failed to make the decision to issue a permit or provide reasons for refusal, within the time period prescribed in the Act. In addition, various parties have a right to appeal a CBO’s decision to the courts. For instance, neighbours who feel they would be aggrieved by a permit could bring an appeal alleging that the permit does not comply with the Act (see, for example, Vandenheede Farms).

The notable exception to the foregoing is that there is no right to challenge a CBO’s decision not to exercise their discretionary power to issue a CP.

Conclusion

In Ontario, unless an applicant has satisfied all “applicable law” in respect to the project’s construction, there will be some uncertainty regarding the issuance of permits, requirements, timing and compliance. Issuance of a permit where all “applicable law” has not been met relies on the CBO’s discretion and a convincing case that potential “unreasonable delay” will outweigh the risks to and efforts required from the municipality.

The permitting process can therefore be a significant source of risk to a project in terms of time and money for all parties, if not managed adequately. In order to facilitate development and ensure bureaucracy does not unduly delay construction, the Act grants the CBO broad discretion to issue conditional permits.

Conditional Building Permits

A CBO may issue a conditional building permit (“CP”) for “any stage of construction” where it believes that “unreasonable delays in the construction would occur” if the CP was not granted. While not defined, compelling impacts to a project that may result in “unreasonable delay” include: • financial (e.g., there will be substantial increases in development charges, and a project is otherwise ready to commence); • housing crisis (e.g., the project will significantly contribute to the housing stock); and • nature of outstanding approvals (e.g., final approvals are not in the applicant’s control).

An applicant must also satisfy the CBO of their compliance with zoning by-laws and enter into a CP agreement with the municipality. A typical CP agreement will require the applicant to assume all risk in commencing construction, agree to obtain all necessary approvals as would normally be required for an unconditional permit and assume the risk of restoring the site to its original condition if such approvals are not obtained. An applicant should not enter into such agreement lightly – for example, the cost to restore a site to its original condition can be substantial.

The CBO can revoke a CP where the applicant has not complied with the terms of the CP agreement, as well as other specified circumstances (for example, if the permit was issued on mistaken, false or incorrect information, or in error; or if construction or demolition has not seriously commenced within a certain time).

While it may appear that the applicant carries all risk associated with a CP, the decision to issue a CP is not without financial risk or administrative burden to the

As one of Canada’s largest Construction and Infrastructure groups, we help our construction clients and the greater industry navigate through and resolve challenges posed by the changed realities of contractual risk allocation, delay and disruption, disputes, and worker safety with innovative business solutions.

In Memoriam

Michael Commons, PQS Ontario Chapter Michael “Mike” Commons, 1961-2023. It is with great sadness that we announce the passing of Mike, beloved husband, father, son, uncle and friend, who passed away on February 24, 2023, after a courageous battle with cancer. Mike leaves behind his wife and best friend, Grace; two sons, Dylan and Conor; brothers, Seamus (Brenda) and John (Mary); sisters, Bernie (Tom) and Dolores (Michael).

development of monumental construction projects. His professional legacy will live on, carried forward by the many colleagues and clients whose careers have been mentored and inspired by Mike.

Mike was a kind and gentle soul who gave far more than he took and was taken from us way too early. Adored by his sons, as well as his nieces and nephews, nothing meant more to Mike than Grace and his two boys, of whom he was immensely proud.

“Having had the opportunity to meet Mike on a number of occasions over the years, I always found him to be personable, focused and a leader that upheld the principles of trust and relationships. Our thoughts go out especially to Mike’s family, the many colleagues, friends and acquaintances – Mike will be dearly missed.” – Arif Ghaffur, PQS(F), Chair, CIQS

Born in Co. Meath, Ireland, he immigrated to Canada with his beloved Grace in 1987. Mike started his ambitious career at Altus Group in 1989 and spent the next 33 years with the company, most recently as President, Cost Consulting and Project Management.

He made immeasurable contributions to the Canadian commercial real estate industry throughout his more than 30-year career. He helped shape the growing skylines across Canada’s major cities by influencing the

His warm and gentle presence will always be with us, and he will be greatly missed. Online condolences may be made through www.turnerporter.ca.

“The loss of a great mentor, gentleman and professional colleague will leave a void. Mike always made a point to check in one on one and never finished a call without asking about family. His sincerity was genuine and the advocacy for leading the Altus Cost Business Unit was a great legacy that he will be fondly remembered for.”

– Tammy Stockley, PQS(F), Vice Chair, CIQS www.ciqs.org | SPRING 2023 | CONSTRUCTION ECONOMIST

15

Education Corner

ChatGPT:

Is education still relevant to quantity surveyors?

Adam Ding, PQS

R

emember the days of using Yahoo! to search the internet in the 1990s? Fast forward to present day and Googling the answer seems to be the current norm…

Until ChatGPT came out!

While the construction industry is not necessarily an early adopter of technologies, it makes sense for quantity surveyors, the selected professionals equipped with specialized education and experience, to be the first to examine the impacts of these emerging technologies. On the education front, I will try to take a shot from the perspective of knowledge learning and training.

ChatGPT (Chat Generative Pre-trained Transformer) is a chatbot launched in November 2022 by OpenAI, an AI (Artificial Intelligence) research laboratory. Essentially, it is an online robot that can have conversations with you and not only answer questions, but also you solve problems. For example, it can develop and debug computer programs, compose music, write poetry, play games and even simulate an ATM! The public has welcomed ChatGPT with open arms. It is now officially the fastest-growing consumer application in history and has notched over 100 million monthly active users just two months after release. At the time of writing, ChatGPT Plus, a commercial version for businesses, is also on the horizon.

I tried ChatGPT a few times and was very impressed by comparing results with my own knowledge. Its perfect answers to generic questions like “create 3D models for earthwork quantities using REVIT” made me wonder: was there an AutoDesk rep hiding behind this robot? But when I posed more specific tasks such as, “Create an Excel spreadsheet file for heavy construction project tender with tabs of labour and equipment hourly rates as input for users and summarize prices for labour, equipment, material and subcontractor for work scope items in one tab,”

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the robot was listing every step and procedure in amazing detail, almost identical to that which I used to do for a living. I then tried, “Write a script to describe the similarities and differences between the United States and Canadian construction estimating.” Taking the robot’s answer, I was even able to generate a video ready for YouTube posting, all within half an hour! Now I am really concerned that it might take my job…

ChatGPT could apparently be a great learning tool.

For quantity surveyors, whether you have some knowledge questions or need quick solutions to technical problems at hand, ChatGPT can provide much-needed assistance – but would it replace humans? While nobody can foresee the future, the rule of thumb is that since a machine is created by humans, it has no human judgment ability. In the construction context, ChatGPT does not know your project specifics, does not visit your job site and is unaware of the challenges you face for scope, budget, schedule, quality and safety. Yes, for now, ChatGPT is just a tool. Cost planning and project monitoring are performed by quantity surveyors, so they are still required to go through a structured education route combining formal curriculum and practical experience. TPE markers will certainly have to be vigilant since ChatGPT can write case studies.

For those who would like to try ChatGPT, please visit openai.com/blog/chatgpt to ask your own unique questions for the AI to answer. Try it and have fun!

Access to ChatGPT is free, and its creator, OpenAI, is a registered non-profit organization, so this article is not sponsored by any external party, and the author receives no compensation.

YQS Corner

Leadership Mykola Pulnyev, PQS, MRICS, PMP, GSC

I

am breaking down the 2023 series of YQS Corner articles into four major areas of focus: Leadership, YQS Engagement, Mental Health and Interview with a Quantity Surveyor.

Leadership is within us – that’s why I wanted to start the 2023 YQS Corner with this central focus. I grew up in Toronto, and rapper Drake’s song “Started at the Bottom” resonates with me all the time. I began my professional career as Junior Estimator with a small general contractor and moved positions and roles across general contractors/construction managers, consultants and owner organizations. The skills required for each role were very

The CIQS congress in Calgary is coming up – register now!

Try to have the cost of your congress attendance budgeted for and pre-approved by your current employer. Most companies have training and development budgets that will cover the cost. Help your organization plan for this expense and take advantage of the event.

On the other side, preparing for a conference is super important. To derive the most from it, carefully study the program and choose the sessions that spark the most interest. Network and get to know other professionals and take notes. Feel free to reach out to me if you have any questions about what I mentioned above. See you soon.

different, but very much transferable. In each role, on different sides of the table, I learned the main points and challenges of each stakeholder in the construction industry.

I have become not a subject matter expert (SME), but someone who knows enough that I can hold an intelligent conversation with all the stakeholders in construction, which provides me with a unique edge. I recommend that young quantity surveyors make this choice early in their careers. Ask yourself, do you want to grow and develop in a narrow specialty and become an SME, or do you want to be a generalist? Either is great, but it’s extremely difficult to be both.

On this note, I wanted to share key principles I learned and acquired on my professional journey up until now.

Throughout my career I learned to: ● Stay humble, receive and give feedback. ● Don’t complain about challenges; come up with possible solutions. ● Become a good citizen of the world. ● Surround yourself with like-minded people. ● Find your idol to follow. ● Seek mentorship and give back.

About the Author

Mykola’s deep understanding of the construction world comes from working for both public and private clients in property, transportation, food manufacturing, defence and clean energy sectors. These diverse experiences have resulted in a balance of knowledge and creativity that drives the desire to advocate and promote the quantity surveying profession and practice best industry standards.

Mykola’s true desire is to guide clients toward a predictable and successful outcome. In time off from projects, he can often be found sitting on industry panels, speaking at industry events, working out at the gym, downhill skiing or paddling on a kayak.

Mykola holds an advanced diploma in Construction Engineering Technology Management from George Brown College and a bachelor’s degree in Applied Science in Technology Management from Bemidji State University.

● Go to conferences and meet people; learn and share!

www.ciqs.org | SPRING 2023 | CONSTRUCTION ECONOMIST

17

Decarbonization

The Climate Policies in Canada: Past, present and future

This article is Part 1 of the DECARRBONIZATION POLICY series for 2023.

A

ccording to Kilpatrick (1), “Public policy can be generally defined as a system of laws, regulatory measures, courses of action, and funding priorities concerning a given topic promulgated by a governmental entity or its representatives.” Dye (2) posited a simpler definition of

public policy as, “everything that governments choose, or choose not, to do”. In Canada, public policies on climate have had a checkered history over the last three and half decades, with varying implications for businesses, including the construction industry. The semblance of calm around the current climate policy in Canada stems from the spring 2021 Supreme Court decision on the constitutionality of federal carbon pricing when, in a majority ruling, the court said that, “The federal

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government is free to impose minimum pricing standards because the threat of climate change is so great that it demands a coordinated national approach.” This effectively ended (or so it appears) the debate about whether Ottawa can impose carbon pricing on provinces that choose otherwise or even lead a coordinated national strategy on decarbonization and climate change. But how did Canada get here, and what did past approaches on climate policy look like?

Decarbonization

Prime Minister Brian Mulroney (left), Liberal Leader John Turner (centre), and NDP Leader Ed Broadbent at a 1988 election debate in Ottawa. Credit: Fred Chartrand/Canadian Press.

How It Started…

Surprisingly, the Progressive Conservatives under Brian Mulroney heralded Canada’s environmental leadership. At the Toronto Conference on the Changing Atmosphere in 1988, Mulroney proposed an international “Law of the Atmosphere” like the “Law of the Sea.” The conference’s closing recommendation was for nations to reduce carbon dioxide emissions by 20 per cent by 2005. By 1992, Canada became the first industrialized nation to ratify the creation of the United Nations Framework Convention on Climate Change (UNFCCC). That year, the federal Green Plan, developed in 1990 to stabilize Canada’s greenhouse gas, or GHG emissions at 1990 levels by 2000, was submitted to the UNFCCC by the Mulroney government. Although commitments to the UNFCCC were voluntary and non-binding, Canada appeared prepared to lead on climate issues.

How It Went

The subsequent Liberal governments of Jean Chrétien/Paul Martin then launched a series of consultations through their National Action Plan on Climate Change with multiple stakeholders – communities, businesses and the provinces. This led to the development of a Voluntary Challenge and Registry (VCR) program in 1995 requiring heavy emitters to voluntarily report their emissions publicly. The voluntary nature of the VCR made it somewhat ineffective, with Canada later aligned with the powerful JUSCANZ bloc, comprising Japan, the U.S., Australia and New Zealand, who opposed binding commitments. Then, without consulting the provinces, two years later at the Conference of the Parties (COP 3) in Kyoto, a six-per-cent reduction in GHG emissions by 2012 compared to 1990 levels was pledged by Canada; this was known as the Kyoto Accord. The battle over ratification of the Kyoto Accord dragged on towards the end of the Chrétien administration, with Kyoto finally ratifying in December 2002.

Strong opposition from industry groups and the provinces meant that the implementation of these

pledges was next to impossible. This largely explained why the Martin administration that took over had to abandon any effort to implement a cap-and-trade carbon pricing program. Reports by researchers from HEC Montréal and MIT suggest that a suitable price on carbon is an effective way to reduce pollution and lower emissions. By 2006, when Canada hosted COP 12 in Montréal, emissions had risen 27 per cent above 1990 levels rather than decrease, and a new Conservative government under Stephen Harper was then in charge.

Harper’s administration (2006-2015) would go on to roll back many of the climate and environmental plans, including rewriting Canada’s Environmental Assessment Act and putting the PM’s office in control of where and when the Act is enforced.

The changes also included the rollback of the Kyoto Implementation Act and cancellation of the National Roundtable on the Environment and the Economy. A $4.5 Billion subsidy program/tax initiative was, however, provided for climate initiatives when it appeared there was significant public interest in climate action. But for all

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19

Decarbonization

intents and purposes, the federal government mostly kept away from strengthening climate policies during this period.

And Now

As the federal government stepped back from climate action, the provinces took the mantle with British Columbia starting North America’s first revenue-neutral carbon tax program in 2007 against its target of 33-per-cent in GHG by 2020 compared to 2007 levels.

Some Canadian provinces and U.S. states banded to launch Western Climate Initiative, a cap-and-trade system for carbon emissions. As provinces stepped up, the Liberal federal government under Justin Trudeau took up the charge to lead a coordinated climate agenda for Canada, starting with the Pan-Canadian Framework on Clean Growth and Climate Change.

The current carbon pricing system started under this framework with eight provinces (except Man. and Sask.) and three territories agreeing to implement a carbon pricing system. Since that landmark 2021 Supreme Court ruling, it appears national carbon pricing has come to stay.

The Net Zero Emissions Accountability Act passed in 2021 and commits Canada to achieve net zero GHG emission by 2050. Its implementation is currently guided by the 2030 Emissions Reduction Plan, which roadmaps how to get to 40 per cent reduction in GHG against 2005 levels by 2030. The hallmark of the plan is enhanced funding for environmental, social, clean energy initiatives, etc., as well as carbon pricing, with rates designed to 2030 to offer businesses certainty.

Overall, when it comes to climate policies, the action of any one government is not the most important for industries and businesses.

Rather, prudent organizations would consider how long-term outlook with changing policies, turnarounds and externalities could impact productivity, as well as business goals.

MacNeil, R. (2019). Thirty years of failure: Understanding Canadian climate policy. Fernwood Publishing.

References

[1] Kilpatrick, D. G. (2000).

Definitions of public policy and the law. National violence against women prevention research center.

[2] Dye, T. R. (2013). Understanding public policy. Pearson.

[3] Caron, J., Cohen, S. M., Brown, M., & Reilly, J. M. (2018). Exploring the impacts of a national US CO2 tax and revenue recycling options with a coupled electricity-economy model. Climate Change Economics, 9(01), 1840015.

[4] Munroe, K. B. (2017). Business in a changing climate: Explaining industry support for carbon pricing.

University of Toronto Press.

About the Author

Ayo Daniel Abiola, PQS, is an Independent Consultant offering cost consulting, facility assessment and appraisals for commercial and institutional properties in the Prairies and across Canada.

Going Forward

The positions of industries and businesses also seem to have shifted from what they were in the three decades prior to 2018. Climate action through carbon pricing is no longer the bigger threat. Climate change itself is now seen as an existential risk for many businesses.

As Munroe (4) explained, “When survival is perceived to be threatened, company officials adapt their decision-making to mitigate the threat, and therefore are more likely to support higher cost policies.”

Therefore, it is no surprise that even heavy-emitting industries, such as the Canadian Association of Petroleum Producers (CAPP), now support carbon pricing.

Further reading

Ayo Daniel Abiola, P.Eng., PQS

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Ayo is licensed to practice engineering in Alberta, Ontario and Saskatchewan. He is also a Certified Energy Manager and a WELL Accredited Professional, having the skills and experience to foster health and wellness in the built environment.

Ayo lives in Regina, Sask.

Prompt Payment

Sahil Shoor

Ontario Superior Court Tackles the Issue of “Paying Twice” When Construction Lien Claims and Adjudications Run Simultaneously

T

he adjudication provisions under Ontario’s Construction Act1 (the Act) can create a situation wherein an owner of a construction project may have to “pay twice” as it relates to construction liens. This situation can occur when contractors and subcontractors register construction liens and seek adjudications on those liens simultaneously.

The “pay twice” issue was recently addressed by the Ontario Superior Court in Okkin Construction Inc. v.

Apostolopoulos, 2022 ONSC 6367. In this case, the Court was unconcerned with the owner having to pay twice as any payment to the general contractor must be held in trust for the subcontractor as required by the trust provisions of the Act, thereby meaning the owner will get credit for any such payment.

Background

The Defendant, Peter Apostolopoulos (Mr. Apostolopoulos) sought improvements on his family home (the Project) and contracted Bond Group Ottawa 2018 Inc. (the Bond Group) to undertake the necessary construction improvements for the Project. When construction delays arose, the Bond Group hired the Plaintiff, Okkin Construction Inc. (Okkin), to perform certain tasks on the Project.

As the work on the Project progressed, the Bond Group issued invoices to Mr. Apostolopoulos, which were paid in full. However, the invoices did not address the statutory holdback, and as a result, Mr. Apostolopoulos failed to retain the statutory holdback required under the Act. When the Project progressed over-budget due to fluctuations in the price of structural steel, Mr. Apostolopoulos refused to pay and terminated the Project contract as a result.

1

The Bond Group filed a Notice of Adjudication under the Act. But before the adjudication was heard, Okkin registered a construction lien against title to Mr. Apostolopoulos’ property in the amount of $196,316.52.

Soon after this, the Bond Group also registered a construction lien against Mr. Apostolopoulos’ property regarding services and materials in the amount of $402,845.71.

At adjudication, the Adjudicator ordered that Mr. Apostolopoulos pay the Bond Group $207,668.91, inclusive of HST (the Adjudication Order). Okkin was not a party to the adjudication. Mr. Apostolopoulos did not satisfy the Adjudication Order, did not address the statutory holdback and did not seek leave to appeal of the Adjudication Order. Rather, Mr. Apostolopoulos brought a motion for directions regarding Okkin’s lien and paid $207,668.91 into an interest-bearing trust account. Mr. Apostolopoulos’ chief complaint was that the Adjudicator’s determination failed to account for Okkin’s lien and that this triggered the statutory prohibition against making payment in the face of a lien, pursuant to Section 24 of the Act.

Superior Court Decision There were two main issues before the Court: (1) whether an owner is required to withhold payments to a contractor in the face of a perfected subcontractor lien under ss. 24(2) of the Act; and (2) whether it is appropriate in the circumstances for the remaining amount of the Adjudication to be held in escrow pending further Court Order or a determination of the outstanding lien claims.

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Prompt Payment

The Court first reviewed the case law on adjudication under the Act. Foremost, the Court looked to the Divisional Court’s decision in SOTA Dental Studio Inc. v. Andrid Group Ltd, 2022 ONSC 2254 where it held that “absent a stay, the Act requires payment of an adjudicator’s order.”2 The Court next looked to the Divisional Court’s decision in Pasqualino v. MGW-Homes Design Inc., 2022 ONSC 5632, where it addressed the purpose of the adjudication provisions in the Act. In doing so, the Divisional Court in Pasqualino held that there is no conflict when an owner has to pay twice, as the Act “permits the owner to seek a reduction of security posted in court by the amount paid pursuant to the Adjudicator’s determination.”3 In analyzing these two cases, the Court held that only one conclusion can be drawn: absent a stay, which was not sought in this case, an Adjudication Order must be paid even if it means that someone will have to pay twice in the short term. The Court found that Mr. Apostolopoulos’ motion to vary the Adjudicator’s Order in a separate proceeding is essentially a “stay.”

As such, the Court was of the view that it did not have jurisdiction in Okkin’s lien proceeding to vary the Adjudicator’s Order.

The Court did acknowledge, however, that the trust provisions under the Act, although not determinative of the entire issue, help to address Mr. Apostolopoulos’ concerns about paying twice. When Mr. Apostolopoulos makes a payment, the Bond Group is required to follow the trust provisions of the Act, which thereby makes the Bond Group a trustee for Okkin. As such, Mr. Apostolopoulos will get credit for his payment. This interpretation of the Act ensures that those lower on the “construction pyramid” who have supplied services and materials will be paid.

In sum, the Court rejected Mr. Apostolopoulos’ arguments and held that if it were to direct that the proceeds from the Adjudicator’s Order continue to be held in trust it would defeat the purpose of the prompt payment provisions of the Act.

Key Takeaways

1. The Superior Court’s decision in Okkin Construction Inc. clarifies that when an owner is subject to registered construction liens and associated adjudications concurrently, the trust provisions of the Act ensure that such an owner will receive credit for its payments.

2. I f an owner is concerned that paying twice will put them in contravention of Section 24 – payments that may be made – of the Act, it ought to raise this issue with the Adjudicator that it not be required to pay until all liens claimed against the holdback are either expired, satisfied, discharged or otherwise provided for under to the Act.

About the Author

Sahil Shoor is a leading litigation and dispute resolution partner with Gowling WLG (Canada) LLP with unrivaled experience in high-value, technically complex construction and infrastructure disputes. Called to the Bar in Ontario and British Columbia, his national practice focuses on the sectors that help drive Canada’s economic development, including commercial construction, real estate development, infrastructure and civil works, power and energy and major public-private partnership/transit projects. He has appeared before courts and arbitration panels (domestic and international) in Ontario, Newfoundland and Labrador, Alberta, Saskatchewan and British Columbia.

Okkin Construction Inc. v. Apostolopoulos, 2022 ONSC 6367 at para 47, citing SOTA Dental Studio Inc. v. Andrid Group Ltd, 2022 ONSC 2254.

2

3

Ibid at para 50, citing Pasqualino v. MGW-Homes Design Inc., 2022 ONSC 5632.

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Advocacy to Support Future Generations

A

s the new year begins, Ottawa’s politicians and bureaucrats will be returning to the office as the clouds of economic woe gather on the horizon.

Tasked with a growing list of challenges such as health care funding, climate change, inflation supply chain constraints and labour shortages, the year ahead will be a demanding one for the government. Coupled with an expected economic slowdown and possible recession, the Liberal government will use Budget 2023 to prove to Canadians that they are competent and in control of Canada’s economy.

Canada’s construction sector is an impressive engine of economic growth. Investments in infrastructure create lasting community assets, support business growth and improve the quality of life for all Canadians. In the lead-up to the budget, Finance Minister Chrystia Freeland has already signaled key goals that confirm health care and green energy will be at the forefront of the government’s agenda. This has been promised all while ensuring that their plan remains fiscally sustainable. While the budget is still being crafted, industry experts agree that green infrastructure will remain a core tenet as they push towards net zero by 2050.

With these goals in mind, key players in the industry, including the Canadian Institute of Quantity Surveyors (CIQS), are well-positioned to continue shaping the green and sustainable future of tomorrow. As the national organization committed to continuing the economic efficiency of construction projects, CIQS members will continue to play a vital role in the future of Canada’s infrastructure development for years to come. The benefits of involving industry professionals in project delivery teams are clear, as we help to ensure every dollar invested in a project is properly allocated. Now, more than ever, Canadians need to see value for their tax dollars, especially when it comes to large-scale public infrastructure projects. Where policymakers may forgo long-term benefits in favour of short-term goals, industry leaders support sustainability by ensuring infrastructure spending helps future generations.

The CIQS membership is comprised of designated Professional Quantity Surveyors (PQS) and Construction Estimators Certified (CEC) professionals. Our members counsel building owners, developers, financial institutions, government bodies, designers and contractors at every stage of design, procurement, construction and ongoing maintenance. Professional Quantity Surveyors and Construction Estimators Certified are an increasingly

Government Relations

valuable consulting asset as federally funded infrastructure projects continue to be delivered from coast to coast to coast. Industry-leading PQSs and CECs continue to take advantage of their time, funding and resources to support these infrastructure projects. Ensuring that value for money and cost assurance is delivered throughout the lifecycle of a development project will reassure Canadians that their tax dollars are being spent efficiently and wisely by their government. This is why our engagement and advocacy work is so important to our industry. Being experts in our field enables us to enlighten policymakers on precise and efficient spending and strengthen the government’s reputation for sound economic management.

Throughout the year, the CIQS has been at the forefront of engagement and advocacy work as it met with government officials at all levels to help shape this future.

In November 2022, the CIQS was in Ottawa to meet with Members of Parliament to build relationships and meet with policymakers. These meetings were coordinated with over 20 Members of Parliament from both the government and opposition parties, including Members from the Ministries and House Committees of Finance and Industry. Meetings with MPs and bureaucratic policy advisors allowed the CIQS to emphasize the importance of advocacy and awareness of government actions by industry members. Notably, the focus of discussions was utilizing PushPolitics as a resource to inform members of ongoing government work, while ensuring legislators are held accountable for these actions.

The purpose of advocacy is to make our voices heard by governments. Together we can show that our help on infrastructure projects makes their dollar go further and that we can anticipate challenges before they become problems. Through our advocacy, the CIQS is working to ensure that our PQSs and CECs have a place at the table when discussing Canada’s long-term infrastructure needs. Through the use of online advocacy tools, such as PushPolitics, the CIQS is able to communicate a common message to our representatives and ensure that our voice is being heard.

Over the coming months, the CIQS will continue its advocacy and reach a plan to engage politicians and stakeholders at all levels of government. In the spring, IMPACT Public Affairs President, Huw Williams, will host a webinar discussing the state of play in Canadian politics and how industry professionals can become further involved in helping with our advocacy work. Whether it is federal www.ciqs.org | SPRING 2023 | CONSTRUCTION ECONOMIST

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Government Relations

or provincial, PushPolitics can be used to engage general membership with advocacy and ensure that your voice and our industry are heard by our representatives. At a time of economic uncertainty while working to revolutionize our infrastructure, it is imperative that we are deriving the greatest return from our public investments. The CIQS believes that construction economists can work with the government to make this possible through entrenching improved analysis, risk assessments and cost planning into our federal planning and procurement model.

The CIQS remains committed to elevating construction economics across Canada and contributing to a vibrant and sustainable Canadian construction industry. CIQS members are ready and willing to work with the federal government to ensure the next generation of Canadian infrastructure is modern, green and cost-effective.

About the Author

Brandon Vieira is a Public Affairs Associate with IMPACT Public Affairs in Ottawa, Ont. Brandon works with a variety of clients to engage the government on Canadian infrastructure issues, including the Canadian Institute of Quantity Surveyors.

Congratulations to the following ‘Designation Holders’ who have qualified as a PQS or CEC (including reinstatements): CIQS – British Columbia Dingying Tang, CEC Dylan Joseph Hoogveld, CEC Jamie Steven Hummelman, CEC Jared Vandergaag, CEC Lam Yiu Hing, PQS Moiz Mohammed, CEC Tim Ik Hyun Kim, CEC Trishna Mae Duran, CEC CIQS – Maritimes Ahmed Eid, CEC Christopher Noye, CEC Kirk Sutherland, CEC Ryan William Duncan, PQS CIQS – Members at Large Abiodun Emmanuel Ayinde, CEC Chakrawarthige Danika Mithuranga Fernando, PQS David Louis Mugabe, CEC Hallinna Lokuge Niroshan Rangajeewa Perera, PQS Huiyuan Li, PQS Jian Zhao, PQS John Parakatt Oommen, CEC Joseph Lupupa Chikonde, PQS Matthew John Bergstrom, CEC Prasanna Samarasinghe, CEC

Sachin Raosaheb Phunde, CEC Said Diab, CEC CIQS – Ontario Ahmed M. Bahgat Elsayed, PQS Aidin Shirahmadi Ghalebaghi, CEC Alex Paul, PQS Ariadne Marques De Mendonça, PQS Bijal M. Dalal, PQS Brian Paul Maillet, CEC Chaminda Ruchira Jayamini Kulatilaka, PQS Don Smail, CEC Firdaus Subeya Sode, PQS Juan Trujillo, CEC Jun Rey B. Lupina, CEC Kiran Kumar Giri Babu, CEC Lawrence Martin, CEC Marc Vincent Oosthuizen, CEC Mary Ann C. Lupina, CEC Mary France Navarro Luyun, CEC Michael Montroy, CEC Mohammad Aldaaja, CEC Nicole Bi, CEC Obinna John Okoli, CEC Poon Ying Chi, PQS Russi Rohitbhai Modi, CEC Samih Abdellatif Eldaw Yousif, CEC Sarvesh Patel, CEC

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Tanya Mead, CEC Vinayak Bhardwaj, CEC Yagnavel Paramanandam, CEC Yang Shi, CEC Yuk Chi Wong, CEC CIQS – Prairies and NWT Ayodeji Temitope Ogundari, PQS Bernadette Andrea Konwat, CEC Bernard B. Catacutan, CEC Eduard Langemann, CEC Field Marshall M. Manzano, CEC Harkiran Sohal, CEC Lisa Roche, PQS Thomas Morawiec, CEC Tsz Ming Tsang, CEC Vincent Byrne, PQS Zoran Jovanovic, CEC CIQS – Québec Adam Ajg Drouin, ECC Amin Jahanshahi, PQS Bodoseheno Albertine Ramiadantsalama, CEC Jaime Jimenez, CEC Meena Hamati, CEC Moatassem Moussa, CEC

Global Impact

Global Uncertainty & Impacts on Canada Interest rate hikes & construction materials price volatility

U

Udayan Chatterjee, B.Tech, PMP, MRICS, PMI-SP

pon studying the changes in the prices of various construction material groups in Canada and their correlation to major global events across many nations from the onset of 2020 through 2022, some interesting trends have been observed.

The events that impact price volatility have been considered for analyses and include the COVID-19 pandemic, Russia’s ongoing invasion of Ukraine and policy interest rate hikes by the Bank of Canada in efforts to wrestle the recent record-high inflation. The impacts of these events on construction material prices have been analyzed by researching the associated data related to Industrial Product Price Indices from Statistics Canada and linking them to the timeline of such events as they took place to establish the causal links and outcomes with a focus on price volatilities of specific construction material groups including energy and petroleum products. As Figure 1 depicts, there was no significant change in the prices of most of the construction material groups including primary ferrous Metals, fabricated metals, cement, glass & non-metallic minerals and machinery & equipment from January 2020 to December 2020. However, an overall increasing trend in prices was noticed starting from January 2021 until June

2022, with a drastic increment occurring in the prices of primary ferrous metals (approximately 71 per cent) and fabricated metals (approximately 45 per cent).

Post-June 2022, prices of most of these construction materials were observed to have declined until the end of 2022, except for cement, glass & non-metallic minerals and machinery & equipment.

2022 after a considerable period of time, with a substantive increase to 4.25 per cent as of December 2022 from 0.25 per cent at the beginning of March 2022. This increase in interest rates was introduced to fight the concerning upward inflation rate in Canada, which peaked at a record high of 8.1 per cent in June 2022 before gradually decreasing.

A steep price increase took place in lumber and other wood products starting from the first half of 2020 and continued until May 2021, with a total increase of approximately 131 per cent, following which the overall trend decreased to an increase of approximately 33 per cent as of December 2022, with the second major peak being noticed in April 2022 of approximately 93 per cent. All increases in prices have a close correlation to the impacts of COVID-19 – declared as a pandemic by the World Health Organization (WHO) in March 2020 – and its subsequent waves, which had devastating impacts on supply chains due to lockdowns and various restrictions imposed by different government bodies.

Conversely, the decreasing trend in prices of most of these materials after June 2022 seems to have a strong connection with the policy interest rate hikes by the Bank of Canada, which was initiated in March

Another interesting trend was observed in the price variation of energy and petroleum products, which decreased substantially from the onset of 2020, reaching a record-low price in April 2020 with an approximate decrease of 44 per cent over four months. Subsequently, there was a steady increase in price until the end of 2021, followed by a steep increase until June 2022. Prices reached a peak increase of 95 per cent, which seemed to have been impacted by Russia’s invasion of Ukraine beginning in February 2022 and the associated geopolitical issues that affected supply chains. Notably, beyond June 2022 the overall trend in the prices of energy and petroleum products, like the other construction materials mentioned earlier, was observed to have been decreased, which is in alignment with the gradual decrease in the inflation rate that seems to have taken place due to quantitative tightening by the Bank of Canada as one of the major contributors.

Udayan Chatterjee, B.Tech, PMP, MRICS, PMI-SP is an Associate Director - Contracts & Commercial at Lakeland Consulting Inc. He is a commercial and project management professional with expertise in quantum assessment, schedule forensics, contract and claims management. He holds a bachelor’s degree in electrical engineering and has worked on various large-scale transportation, mining and commercial construction projects across Canada and India.

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Cost Volatility

Wire, PVC, Oil and Transportation – Cost Volatility: Magnitude & trends Context & Background

Those supplying, installing and commissioning items such as electrical equipment are typically associated with wire, polyvinyl chloride (PVC), oil and transportation in some manner. Historically, contractors delivering this type of work operated in an environment with an expected price range and timeline, enabling prices to be sustained for project durations. Canadian construction continues to grapple with volatile resource prices (materials, transportation, etc.), the magnitude of which are unprecedented.

The extent of this cost volatility will be explored further in this paper, recognising that the cost of such uncertainty continues to be multi-factorial, multi-dimensional and leading to a change in modus operandi. The events leading to such cost volatility include the following, in isolation or combination: • P andemic-Related Issues: COVID-19 restrictions have led to supply chain issues such as reduced and delayed availability of materials, constraints to the supply chains and accompanying disruptions.

These have resulted in significant increases in the prices of commodities such as those typically used in construction.

• W orldwide Events: For example, the Russia-Ukraine conflict has increased the prices of commodities.

Russia is one of the leading producers of a great number of mineral commodities and oil. The conflict has had multiple impacts on the costs and availability of construction materials.

• E conomic Drivers: Ongoing evolution of unpredictable economic cycles, impacted by the pandemic and worldwide events, directly affects interest rates and contributes to price increases, thereby causing inflationary pressures.

These issues, events and drivers have impacted the construction industry and led to unpredictable fluctuations within the Canadian market.

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Significances of Events

The Raw Materials Price Index (RMPI) measures price changes for raw materials purchased for further processing by manufacturers operating in Canada.

In September 2022, RMPI was up 67.4 per cent compared with March 2020. Comparatively, there was a 16.7 per cent decline in March 2020 when compared with January 2018.

The Industrial Product Price Index (IPPI) measures price changes for major commodities sold by manufacturers operating in Canada. In September 2022, IPPI was up 27.8 per cent compared with March 2020. Comparatively, there was a 0.8 per cent increase in March 2020 when compared with January 2018.

Inflationary pressures in Canada rose sharply in 2022.

The Consumer Price Index (CPI) rose 6.8 per cent on an annual average basis in 2022, whilst the inflation rate was 3.4 per cent in 2021 and 0.7 per cent in 2020.

These increases in the RMPI, IPPI and inflation reflect the impact of the rising costs of manufacturing, resources and transportation that contributed to pandemic-related issues, worldwide events and economic drivers.

Impacts & Implication

Contractors bidding for long-term, fixed-price contracts are particularly vulnerable to fluctuations, even if they have taken and continue to take commercially reasonable steps to mitigate the consequences of the current economic situation, e.g., making financial/ commercial allowances for resource escalation.

The world is experiencing a disruption within the supply chain. For instance, companies supplying wire and cable have experienced ongoing delays from key PVC suppliers, resulting in a slowdown of production that has led to a pause in the manufacturing of specific products.

These events often require contractual or other relief to wire, PVC, oil and transportation, as set out below:

Cost Volatility Wire

Copper or aluminum are primary components of wires. The price characteristics for copper and aluminium are shown in Chart 1 (Copper) and Chart 2 (Aluminium): Copper 2018, Jan.: Pre-Pandemic 1. Nasdaq: 3.2134 USD/Pound(lbs) 2. I nvesting.com: 3.2145 USD/Pound(lbs) 2020, Mar.: Pandemic 1. Nasdaq: 2.3591 USD/Pound(lbs) 2. Investing.com: 2.3545 USD/Pound(lbs) 2022, Feb.: Pandemic/Russia-Ukraine Conflict 1. Nasdaq: 4.5066 USD/Pound(lbs) 2. Investing.com: 4.5056 USD/Pound(lbs) 2022, Dec.: Pandemic/Russia-Ukraine Conflict 1. Nasdaq: 3.8202 USD/Pound(lbs) 2. Investing.com: 3.8221 USD/Pound(lbs)

Chart 1: Copper Historical Price Graph.

(Sources: Nasdaq and Investing.com)

Aluminium 2018, Jan.: Pre-Pandemic 1. Markets Insider: 2,217.7727 USD/Ton 2. Investing.com: 2,216.9205 USD/Tonne 2020, Mar.: Pandemic 1. Markets Insider: 1,633.9486 USD/Ton 2. I nvesting.com: 1,633.5455 USD/Tonne 2022, Feb.: Pandemic/Russia-Ukraine Conflict 1. Markets Insider: 3,213.7625 USD/Ton 2. Investing.com: 3,215.7500 USD/Tonne 2022, Dec.: Pandemic/Russia-Ukraine Conflict 1. M arkets Insider: 2,435.2100 USD/Ton 2. I nvesting.com: 2,434.6500 USD/Tonne

Price Trend for Copper and Aluminium Wire

Chart 2: Aluminium Historical Price Graph.

(Sources: Markets Insider and Investing.com)

There were declines in the prices of copper and aluminum pre-pandemic. The pandemic, Russia-Ukraine conflict, and other economic factors dramatically increased prices, with a rise of more than 98.9 per cent for copper and more than 114.7 per cent for aluminum from March 2020 to March 2022. Since March 2022, these prices have followed the overall downward trend.

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Cost Volatility

Oil

Oil provides raw materials for PVC and is a resource refined into transportation fuel. The price characteristics for Brent Oil are shown in Chart 3: Brent Oil 2018, Jan.: Pre-Pandemic 1. Nasdaq: 69.0224 USD/BBL 2. Investing.com: 69.0786 USD/BBL 2020, Mar.: Pandemic 1. Nasdaq: 33.8932 USD/BBL 2. Investing.com: 33.7291 USD/BBL 2022, Feb.: Pandemic/Russia-Ukraine Conflict 1. Nasdaq: 94.0489 USD/BBL 2. Investing.com: 94.1015 USD/BBL 2022, Dec.: Pandemic/Russia-Ukraine Conflict 1. Nasdaq: 81.3414 USD/BBL 2. Investing.com: 81.6110 USD/BBL

Chart 3: Brent Oil Historical Price Graph.

(Sources: Nasdaq and Investing.com)

Price Trend for Oil There was a decline in the price of Brent Oil pre-pandemic. The pandemic, Russia-Ukraine conflict and other economic factors dramatically increased the price of Brent Oil, rising more than 247.1 per cent from March 2020 to June 2022. Since June 2022, the prices have been on a general downward trend. For the overall trend during the pandemic period, there was a significant price rise of more than 139.9 per cent, from March 2020 to December 2022.

PVC

The price characteristics of polyvinyl chloride are shown in Chart 4: Polyvinyl chloride 2018, Jan.: Pre-Pandemic • Statista: 921 USD/Metric Ton 2020, Mar.: Pandemic • Statista: 889 USD/Metric Ton 2022 Jan. to Oct.: Pandemic/ Russia-Ukraine Conflict • Statista: 1,182 USD/Metric Ton

Chart 4: Polyvinyl Chloride Historical Price Graph.

(Source: Statista)

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Cost Volatility

Price Trend for PVC There was a decline in the price of PVC pre-pandemic, but a sharp increase of 63.0 per cent from 2020 to 2021.

Key Points • S ome stabilization in pricing volatility • Multi-factorial events continue.

• Supply chain seeks ongoing relief.

Transportation

Below are some indicators for transportation costs: 1. F or-hire motor carrier freight services price index (FHMCFSPI - Truck Transportation): Establishments primarily engaged in the truck transportation of goods. These establishments may carry general freight or specialized freight.

2. Freight Rail Services Price Index (FRSPI): Mainline freight rail industry in Canada. The industry consists of establishments primarily engaged in operating railways for the transport of goods over a mainline rail network.

3. Couriers and Messengers Price Index (CMSPI): Courier and messenger services provided by long- and short-distance delivery companies to Canada-based business clients.

4. Brent Oil: Refineries turn crude oil into transportation fuels such as gasoline, diesel and aviation fuels.

The Transportation Index is shown in Chart 5 below: Transportation Index 2018, Jan.: Pre-Pandemic 1. S tatistics Canada: 105.3 (FHMCFSPI-Truck Transportation) 2. Statistics Canada: 95.0 (FRSPI) 3. Statistics Canada: 95.6 (CMSPI) 2020, Mar.: Pandemic 1. S tatistics Canada: 112.9 (FHMCFSPI-Truck Transportation) 2. Statistics Canada: 108.5 (FRSPI) 3. Statistics Canada: 102.2 (CMSPI) 2022, Feb.: Pandemic/RussiaUkraine Conflict 1. S tatistics Canada: 129.4 (FHMCFSPI-Truck Transportation) 2. Statistics Canada: 113.9 (FRSPI) 3. Statistics Canada: 117.0 (CMSPI) 2022, Sep.: Pandemic/RussiaUkraine Conflict 1. Statistics Canada: 144.9 (FHMCFSPI-Truck Transportation) 2. Statistics Canada: 125.9 (FRSPI) 3. Statistics Canada: 130.4 (CMSPI)

Chart 5: Transportation Historical Index Graph.

(Source: Statistics Canada)

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Cost Volatility

Trend for Transportation Costs Transportation indices above indicate a continual growth of transportation across the board. Pre-pandemic increases ranged between 6.9 per cent and 14.2 per cent from January 2018 to March 2020, compared with increases ranging between 16.0 per cent and 28.3 per cent from March 2020 to September 2022. As previously noted, there was an increase in oil prices from March 2020 to June 2022.

Conclusion

Unexpected market fluctuations due to the pandemic, worldwide events and complex economic issues have resulted in volatile material pricing and ongoing supply chain disruptions. Particularly, significant increases were observed in the prices of construction materials from 2020 to 2021. Due to these unprecedented and unforeseen events, contractors and subcontractors are increasingly being left in untenable situations.

Although the Russia-Ukraine conflict continues to restrain economic activity, there appears to be a moderation in the rising tide of material costs in 2022, and material prices are anticipated to gradually decrease over a projection horizon (timeline unknown) from their elevated levels.

Uncertainties from the ongoing Russia-Ukraine conflict and other economic drivers have played and continue to play a vital role in the construction industry. Restoring price stability could be achieved sooner if the conflict and economic uncertainties dissipate faster. The impacts on project viability and performance are perpetual rather than temporary. Skillful management of cost volatility and price uncertainty is acquiring an appreciation.

About the Authors Marc Oosthuizen BTech (QS), CEC Senior Contracts & Commercial Specialist Lakeland Consulting Inc. Marc Oosthuizen has expertise in Commercial and Contracts management having worked extensively on projects in South Africa, Zambia, the Caribbean and Canada. Marc has assisted clients in addressing complex disputes whilst being part of a solution-focused team.

Karen Cheung Bsc(Surv), PQS, MRICS, MCInstCES Contracts & Commercial Specialist Lakeland Consulting Inc. Karen Cheung is a Professional Quantity Surveyor and Chartered Surveyor with experience of working on projects in Hong Kong and, recently, in Canada.

She has been involved in project planning/design, pre-contract, delivery and post-construction phases.

Volunteering Opportunity Assistant To the Managing Editor (Construction Economist) Working closely with the Managing Editor of the Construction Economist, the successful applicant will directly assist with journal content development, in line with the CIQS’s strategy objectives.

The role will require creativity, enthusiasm, and dedication in contributing to a quarterly journal that has and continues to develop as a best-in-class publication in Construction Economics. Interested in this role? Send an expression of interest with a cover letter, setting out your experience to memberservices@ciqs.org. Deadline to submit is June 16, 2023.

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