Construction Economist Journal - Fall 2015

CONSTRUCTION ECONOMIST FALL 2015

PM 40065075

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

• New Affiliated Association in Quebec • Insurance programs for construction projects • $4 billion New Champlain Bridge Corridor • Professional liability for Cost Consultants • 2016 CIQS Congress Toronto

ciqs.org

Are you the right fit?

We’re always on the lookout for the right professionals. The ones that want to make a difference. The ones that want to help our clients’ keep their projects on track.

If that sounds like you, then we should talk.

Who are we? We are Hanscomb. We’ve been around since 1957, the oldest QS firm in Canada, still independent, still 100% Canadian and, while we have offices across the country, we remain a tightly knit team dedicated to a common goal – making the projects we work on successful, for our clients and for us.

While the job requirements vary from position to position, here’s what we generally look for in new cost planning talent who want to explore a future with Hanscomb: • A post-secondary diploma or degree in Architectural Science, Construction Engineering, or an applicable field • Canadian construction cost or time planning experience • An applicable designation or desire to work towards advancement within an industry related association — Canadian Institute of Quantity Surveyors – Professional Quantity Surveyor, Royal Institute of Chartered Surveyors – Member, Professional Engineer, AACE International or another appropriate association We are looking for Junior / Intermediate / Senior Cost Consultants who specialize in: • • • •

Electrical, Mechanical, Architectural & Structural and Civil Technical Advisory roles Independent Certification Construction Loan Monitoring

Successful candidates will be offered positions with a competitive salary, bonus, and benefit package in a dynamic, fast paced environment. With offices across Canada, career growth potential is excellent.

Candidates can apply to work in any Canadian Office.

Email us: hr@hanscomb.com Please indicate which role and the location you are applying for.

www.hanscomb.com

CONSTRUCTION ECONOMIST FALL 2015

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 e. info@ciqs.org www.ciqs.org

Executive Director Lois Metcalfe. ........................... . . . . . . execdir@ciqs.org Editor Arif Ghaffur, PQS....................... . . . . . . . editor@ciqs.org Send Change of Address to: Canadian Institute of Quantity Surveyors 90 Nolan Court, Unit 19, Markham, Ontario L3R 4L9

CIQS Board Chair: Craig Bye, PQS Vice Chair and Secretary/Treasurer: Matthew K. Weber, PQS Past Chair: Dave Burns, PQS(F)

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

Features New Champlain Bridge Corridor. . . . . . . . . . . . . . . . . . 14 New RICS-CIQS project monitoring guidance will fill important need for Canadian industry and lenders . . . . . . . . . . . . . . . . . 16 New affiliated association in Québec/ Nouvelle association affiliée au Québec . . . . . . . . . . 18 Report on the CIQS 2015 Congress . . . . . . . . . . . . 20 3rd CIQS Congress preview. . . . . . . . . . . . . . . . . 22

Registrar and CIQS – Prairies and NWT Rep: Wendy Hobbs, PQS

The PAQS-Iwata Foundation 2016 Travelling Scholarship competition. . . . . . . . 24

CIQS – British Columbia Rep: Angela Lai, PQS CIQS – Maritimes Rep: David Dooks, PQS

Designing an Effective Insurance Program for Construction Projects. . . . . . . . . . . 26

CIQS – Newfoundland and Labrador Rep: Colin Penlerick, PQS CIQS – Ontario Rep: Patrick Cantin, PQS

Member interview – George Evans. . . . . . . . . . 30

CIQS – Quebec Rep: Guillaume Robitaille, PQS Education Administrator: David Lai, PQS(F)

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 by

Corners

Messages

10 Education Corner . . . . . . . . . . . . . . 12 Aspiring Professionals Corner. . . . . 32

Chair’s Message. . . . . . . . . . . . . . . .

Legal Corner. . . . . . . . . . . . . . . . . .

Third Floor - 2020 Portage Avenue Winnipeg, Manitoba R3J 0K4 Tel: 866-985-9780 Fax: 866-985-9799 info@kelman.ca www.kelman.ca Managing Editor. ........................ . . . Chris Kelman Art Design/Production. ............. . . . . Jackie Magat Advertising Coordinator...... Stefanie Hagidiakow Marketing Manager. .................. . . . . . . . . . Jeff Kutny jeff@kelman.ca 866-985-9789 Publication Mails Agreement #40065075 Send undeliverable addresses to: lauren@kelman.ca

OUR CONCERN FOR THE ENVIRONMENT IS MORE THAN JUST TALK This document is printed on paper certified to the standards of the Forest Stewardship Council® (FSC®).

4 Executive Director’s Message. . . . . . 6 Editor’s Message . . . . . . . . . . . . . . . 7 Letters to the Editor. . . . . . . . . . . . . 9 Congratulations. . . . . . . . . . . . . . . 34

Chair’s Message

Fulfilling CIQS’ mission

A

llow me to introduce myself.

I joined the Institute in 2005 and received my Professional Quantity Surveyor designation in 2007. Prior to becoming a consultant with Hanscomb in 2004, I began my construction career in 1983 as an apprentice electrician, earning my license in 1988.

I progressed to be a Foreman, Chief Estimator and Project Manager.

During my period with the CIQS, I have served as CIQS-Ontario Central Hamilton Chapter Vice President and President, Secretary/Treasurer, Vice President, and President and am the Past President on the CIQS-Ontario Board. On the CIQS National Board, I have served as Registrar, Chair of the CIQS Membership, Staffing, Business & Long Range Plan and Governance committees and Vice Chair.

It is my honour and privilege to be able to serve as Chair of CIQS. While I am looking forward to the upcoming year, it will be bittersweet, as it is the final year that our beloved Lois Metcalfe will serve as the Executive Director of CIQS. I hope that many of you will be able to join us at the 2016 CIQS Congress in Toronto, June 2016 to wish her all the best in retirement, and to thank her for being the soul of CIQS all these years.

I am very pleased that one of the first official acts during my term as Chair was the signing of an Affiliation Agreement, along with Guillaume Robitaille and Matt Weber, welcoming CIQS-Quebec as a Member of CIQS. The Institute is once again represented across the country.

I look forward to continue working with, and would like to thank, our Past Chair, Dave Burns, for his contributions not only this past year but also for

his many years on the National and CIQS-Prairies & NWT Boards. I thank outgoing CIQS Board members for their hard work over the years, and Michael Bernier, who was helpful with the development of the Affiliate Agreements signed this past year.

Roy Lewis and Mark Gardin have also left their official capacities with the Board after many years of outstanding service and devotion to the Institute.

Their strong character, thoughtful opinions and mentorship will be missed.

We have a very enthusiastic Board including new Council members Angela Lai, Wendy Hobbs, Guillaume Robitaille and Colin Penlerick, as well as returning members David Dooks, Patrick Cantin, Vice-Chair Matt Weber, David Lai, (who has exceptionally fulfilled the position of Education Administrator since 2008), Lois Metcalfe, our Executive Director and Arif Ghaffur, Editor of the Construction Economist. I very much look forward to working with the CIQS Board and Affiliates this year.

CIQS has come a long way these past few years with our re-branding, ratifying our by-laws at the 2013 AGM in Montreal, creation of our National Standards and signing of Affiliation Agreements with all Affiliates. We have also published new text books and are updating others. Our marketing plan continues to educate students, industry and government about the Institute and Professional Quantity Surveying.

As we are all aware, CIQS has Designation Holders from all across the world. There are also an increasing number of Construction and Consulting firms coming to Canada. As a result, we need to continue to be a presence and voice on the international stage.

This has been developed over the

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Craig Bye, PQS

years by CIQS’ international involvement and participation with CEEC, ICEC, PAQS and ICMS. CIQS Past Chair, Ian Duncan, is now the President of PAQS. Closer to home, I do not want to forget that the main objectives of the CIQS are: • to promote and advance the professional status of quantity surveyors in Canada to the highest standards of competence and integrity so as to ensure the protection of the public in all matters concerning the profession; • to establish and maintain a bond amongst the societies recognized by the Canadian Institute of Quantity Surveyors as affiliated associations and to represent such associations and their members in all matters of national or international concern or interest to the profession; • to establish, maintain and coordinate – in conjunction with affiliated associations – the highest standards of professional competence and integrity for all individual members through equivalent educational and professional development programs; • to collaborate with other professions and organizations in the interest of the construction industry on national and international levels.

This year, I intend to fulfill our Mission to promote and advance professional quantity surveying and construction estimating, establish and maintain national standards and recruit, educate and support our members.

On behalf of the Board, I confirm our commitment to represent the CIQS Designation Holders in all that we undertake.

Message du Président du Conseil

L’accomplissement de la mission de l’ICÉC

P

ermettez-moi de me présenter.

Je me suis joint à l’Institut en 2005 et j’ai obtenu ma désignation professionnelle d’économiste en construction en 2007. Avant de devenir consultant avec Hanscomb en 2004, j’ai commencé ma carrière en construction en 1983 comme apprenti électricien et j’ai obtenu ma licence en 1988. J’ai progressé à titre de contremaître, estimateur en chef et gestionnaire de projet.

Depuis mes débuts avec l’ICÉC, j’ai siégé à titre de vice-président, président et secrétaire/ trésorier du chapitre Central Hamilton de l’ICÉC - Ontario, en plus d’avoir déjà été président du Conseil de l’ICÉC - Ontario.

De plus, j’ai occupé les postes de greffier, président et vice-président pour les comités d’adhésion, de recrutement et d’affaires, de même que sur les comités de planification stratégique à long terme et d’administration.

C’est un honneur et un privilège pour moi de pouvoir siéger en tant que président de l’ICÉC. Alors que je me réjouis à l’idée d’entamer cette nouvelle année, je ressens un peu d’amertume car il s’agit de la dernière année que notre bien-aimée Lois Metcalfe servira en tant que directrice générale de l’ICÉC. Je souhaite que plusieurs d’entre vous pourront se joindre à nous lors du Congrès 2016 de l’ICÉC, qui aura lieu à Toronto en juin 2016, pour lui offrir vos meilleurs voeux pour sa retraite et la remercier d’avoir été l’âme de l’ICÉC pendant toutes ces années.

Je suis très heureux que l’un de mes premiers gestes officiels à titre de président soit d’avoir signer une entente d’affiliation avec Guillaume Robitaille et Matt Weber, tout en souhaitant la bienvenue à l’ICÉC - Québec en tant que membre de l’ICÉC. L’Institut est une fois de plus représenté à travers le pays.

Je me réjouis également de pouvoir travailler en collaboration avec l’ancien président, Dave Burns. J’aimerais le remercier pour ses contributions, non seulement au cours de la dernière année, mais aussi pour

les nombreuses années qu’il a siégé sur le Conseil national et le Conseil de ICÉC - Prairies et TNW. Je remercie également les membres du Conseil de l’ICÉC qui nous quittent pour votre travail acharné au cours des années et Michael Bernier qui a aidé à l’élaboration des accords d’affiliation qui ont été signés au cours de la dernière année. Roy Lewis et Mark Gardin ont également quitté leurs fonctions officielles au sein du Conseil après plusieurs années de travail extraordinaire et de dévouement envers l’Institut. Leur caractère affirmé, leurs opinions mûrement réfléchies et leur mentorat nous manqueront.

Nous avons un Conseil très dynamique incluant de nouveaux membres, soit Angela Lai, Wendy Hobbs, Guillaume Robitaille et Colin Penlerick. Plusieurs membres sont également de retour, tels que David Dooks, Patrick Cantin, vice-président, Matt Weber, David Lai (qui occupe le poste d’administrateur de l’éducation depuis 2008, et ce, d’une façon exceptionnelle), Lois Metcalfe, directrice générale, et Arif Ghaffur, éditeur du Construction Economist. Je me réjouis à l’idée de collaborer avec le Conseil de l’ICÉC et les affiliés dans l’année à venir.

Nous pouvons constater que l’ICÉC a fait de grands progrès au cours des dernières années lorsqu’on considère la conception de notre nouvelle image, la ratification de nos règlements à l’AGA à Montréal en 2013, la création de nos standards nationaux et la signature de nos accords d’affiliation avec tous les affiliés. Nous avons également publié de nouveaux livres et procédons à la mise à jour de certains autres. Notre stratégie marketing continue d’éduquer les étudiants, l’industrie et le gouvernement en ce qui concerne l’Institut et la profession d’économiste en construction.

Comme nous le savons tous, l’ICÉC a des détenteurs de désignation à travers le monde. De plus, le nombre de firmes de construction et de consultation est en

croissance au Canada. Par conséquent, nous devons maintenir notre présence et notre voix sur la scène internationale.

Celle-ci a été développée à travers les années par l’implication et la participation de l’ICÉC envers les CEEC, ICEC, PAQS et ICMS. Notre ancien président, Ian Duncan, est maintenant de président du PAQS. Plus près de nous, je ne veux pas oublier que les objectifs principaux de l’ICÉC sont: • L’avancement et la reconnaissance du statut professionnel des économistes en construction au Canada vers les plus hauts standards de compétence et d’intégrité afin d’assurer la protection du public face à la profession; • L’établissement et le maintien de liens étroits avec les sociétés reconnues par l’Institut canadien des économistes en construction à titre d’associations affiliées et la représentation de ces associations et de leurs membres dans tous les domaines de préoccupation ou d’intérêt national et international en lien avec la profession, • L’élaboration, le maintien et la coordination – conjointement avec les associations affiliées – vers les plus hauts standards de compétence professionnelle et d’intégrité pour tous les membres individuels par l’entremise de programmes équivalents de développement professionnel et éducatif, • La collaboration avec les autres professions et organisations dans l’intérêt de l’industrie de la construction au niveau national et international.

Cette année, je compte remplir notre mission de promouvoir et de faire avancer les professions d’économiste et d’estimateur en construction, établir et maintenir les standards nationaux, recruter, éduquer et soutenir nos membres.

Au nom du Conseil, je confirme notre engagement à représenter les détenteurs de désignation de l’ICÉC dans tout que nous entreprenons.

Fall 2015 | www.ciqs.org | CONSTRUCTION ECONOMIST | 5

Executive Director’s Message

Welcome and farewell

T

he 2015 CIQS Annual General Meeting was held on July 10 in Nassau, Bahamas. The nominations for representatives from the affiliated associations were accepted at the AGM, forming the CIQS Board of Directors for the 2015/16 year.

Welcome to new CIQS Directors: Angela Lai representing CIQS – British Columbia and Yukon, Wendy Hobbs representing CIQS Prairies and NWT and Colin Penlerick representing CIQS – Newfoundland and Labrador.

We bid a fond farewell to Directors Mark Gardin, Roy Lewis and Michael Bernier.

Roy Lewis served on the CIQS Board for almost a decade. He joined the Board in 2006, representing his affiliated association, CIQS – Newfoundland and Labrador. Roy was elected as 1st Vice Chair in 2010, and then moved up to Chair in 2011.

He has served on the CPD, Business and Long Range Plan, Legal, Membership, Government Initiatives, International Relations, Governance, AGM and Staffing committees. Working tirelessly for the Institute and his affiliated association earned him his Fellowship

designation in 2011, and the prestigious CIQS Gordon Pattison Award of Merit in 2014.

Mark Gardin completed his term as CIQS Past Chair, having served on the Board since 2009, joining as CIQS – Maritimes representative. Mark was elected as 1st Vice Chair in 2012 and became Chair in 2013. He served on the CPD, Business and Long Range Plan, Website, Government Initiatives, Governance, International and Staffing Committees during his tenure. Mark continues to serve the CIQS on the CIQS Membership Committee. In recognition of his work for the Institute, Mark was awarded Fellowship status in 2014.

Michael Bernier joined the CIQS Board of Directors in 2014 as CIQS – Prairies and NWT representative.

He served as Lead on Committee ‘Affiliated Associations’ which led to the ultimate signing of new agreements between CIQS and the affiliated associations this past year. Given the many revisions, updates and discussion, signing these agreements was a very significant achievement. As recognition for his work for the CIQS and his

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6 | CONSTRUCTION ECONOMIST | www.ciqs.org | Fall 2015

Lois Metcalfe

affiliated association, Michael was awarded the Gordon Pattison Award of Merit this year.

The knowledge and contributions of Roy, Mark and Michael were invaluable; they will be missed by the Board. On behalf of the Board and all Designation Holders of the CIQS, I extend our sincere thanks to Roy, Mark and Michael for serving and a job well done.

Your 2015/16 CIQS Board is as follows: • CHAIR Craig Bye, chair@ciqs.org • VICE CHAIR Matthew Weber, vicechair@ciqs.org • PAST CHAIR Dave Burns, pastchair@ciqs.org • CIQS – BRITISH COLUMBIA AND YUKON REPRESENTATIVE Angela Lai, ciqsbcdir@ciqs.org • CIQS – PRAIRIES AND NWT REPRESENTATIVE Wendy Hobbs, ciqsprairiesdir@ciqs.org • CIQS – ONTARIO REPRESENTATIVE Patrick Cantin, ciqsondir@ciqs.org • CIQS – MARITIMES REPRESENTATIVE David Dooks, ciqsmaritimesdir@ciqs.org • CIQS – NEWFOUNDLAND AND LABRADOR REPRESENTATIVE Colin Penlerick, ciqsnldir@ciqs.org • CIQS – QUEBEC Guillaume Robitaille, ciqsqcdir@ciqs.org • CIQS EDUCATION ADMINISTRATOR David Lai, education@ciqs.org • CIQS EXECUTIVE DIRECTOR Lois Metcalfe execdir@ciqs.org Please do not hesitate to contact any member of the Board if you have any questions, comments or concerns.

We welcome input from all our Designation Holders.

Editor’s Message

Arif Ghaffur, PQS

S

Economic uncertainty, construction and business alignment

peculation around the condition of the Canadian economy continues, including the impact on the construction industry. Much of the focus has been on the instability of the resource sector, tinged with the usual and seemingly perpetual speculation around the housing sector. Arguably, one beneficiary has been the Canadian manufacturing industry, which has benefited from the lower value of the Canadian Dollar in exporting, particularly to our neighbour, the United States. This is all likely to play out in the performance of the Canadian economy for the balance of 2015 and well into 2016. Whilst there has been much debate about a general slowdown in certain sectors of construction with a reluctance to use the “R” (i.e. Recession) word too often, there remain significantly sized construction projects underway across Canada that extend from highways/bridges and rapid transit to energy pipelines. There is also sectorspecific stimulus such as the New Canada Plan, the largest infrastructure initiative in Canada’s history. The Plan is aimed at providing over $50 billion to support provincial, territorial and municipal infrastructure between 2014 and 2024.

In addition to the continuing inward debate, the plethora of expert opinion around the specific condition of the Canadian economy and an upcoming federal election, there are particular nuances associated with the complexity of economic issues facing countries worldwide, which directly or indirectly affect the performance of the Canadian economy, and are worthy of further review. 2016 will signal the presidential elections in the United States, which will influence its economic approach, based on the political agenda of the

prevailing leadership. Whilst housing prices in the United States appear to be stabilizing in certain locations, oil prices remain in a general state of flux.

Noteworthy is that, during this period of transition, there are significant construction related issues between Canada and United States that remain unresolved – namely the Keystone pipeline, which runs from Alberta, in a general south easterly direction. In contrast, Europe continues its attempts to stimulate its fledgling economies, ranging from optimism in certain parts of the United Kingdom to the continuing uncertainty in Greece, and further slowdowns in the Chinese economy.

Clearly a lack of economic growth or retraction in the Canadian economy can be partly attributed to international components such as the United States economy, the uncertainty in Europe, China’s market volatility and lower oil prices. Such international components do, however, have to be viewed in combination with the performance of key aspects of the Canadian economy including interest rates, gross domestic product (GDP) and the benefit of a low value in the Canadian dollar. The media is littered with debate on the severity of recessionary downturn, with consecutive quarters of negative growth leading to the cutting of interest rates, which has itself been met with scepticism.

Also, stock markets across the world continue to wildly fluctuate as economic uncertainties continue to haunt investors.

Based on current knowns, with the economy posting negative growth in both the first quarter (-0.6%) and the second quarter (-0.5%), what is known is that Canada has been in economic downturn in the first half of 2015.

Growth forecasts for the whole year are also on a general trajectory downwards

to below 1%, based on some economic ‘experts.’ On the flip side, other than for lousy GDP growth, some economists argue that Canada’s economy is in better shape today than it was the last time rates were this low. In the second quarter of 2015, at the end of June, the unemployment rate was 6.8% (versus 8.0% in 2010 Q2), inflation was running at 2.3% (compared 1.8% in 2010), and the loonie was at 77 cents US (versus 97 cents US five years ago). So, perhaps there is some room for optimism, in that things appear to be not as bad as historically, or not as bad as they might be today. Again, such is the world of economic uncertainty.

Nevertheless, whilst construction is always an interesting (if not political) measuring yardstick of economic performance and a natural point for economic stimulus, there are certain sectors within construction that continue to attract attention. In particular infrastructure – from roads and bridges, to transit – continues to garner significant attention. Irrespective of initiatives at the municipal, provincial or federal levels, infrastructure has continually attracted political interest in this Canadian election year. Although there is ongoing debate about where finances come from (i.e., whether from the public or private sector), the promotion of such projects no doubt

Journal Online The Construction Economist is also available in electronic format.

Please visit the CIQS website www.ciqs.org and press the ‘Publications’ tab.

Fall 2015 | www.ciqs.org | CONSTRUCTION ECONOMIST | 7

Editor’s Message

We are not just a profession for the good times, we are equally if not better positioned to apply our expertise in times of economic uncertainty, particularly as businesses realign. fuels the broader political intentions.

This is not unique to Canada; it is a feature in most developed and developing economies, as governments work towards filling significant infrastructure deficits, involving years of work and trillions of dollars.

Whilst the infrastructure debate continues, the real estate and housing market always guarantees much attention as it has a direct impact upon many Canadians. Analysts continue to trade exchanges over whether the hot housing market will slow down or continue with strong growth into 2016. Of course, this is affected by regional nuances, which are themselves influenced by local, economic performance, (e.g. consider the impact of the reduction in the price of commodities on the Alberta housing market). Certain sectors of the housing market continue to attract foreign money in places such as Toronto and Vancouver. In contrast, the retail and commercial sectors have been rocked by Target`s quick departure from Canada, which has started much further debate as to what extent American retailers will invest in Canada. This, in parallel with an increase in online purchasing, is raising questions as to what extent physical locations will be required as points of sale. Surely, all of this will impact how developers seek to lease their properties.

Did You Know?

Bob Spence stated that his election as CIQS President (1975) represented a significant milestone in the development of the Institute, in that he was the first President who qualified for membership through the examination system of the Institute.

There is little doubt that commodities play a significant part in investment in the construction sector. The investments made by natural resource companies in Saskatchewan and Alberta, (which benefited significantly from a large number of mega projects), are a clear example of this. Commodities such as nickel, natural gas, uranium, potash and copper continue to be affected by global demand, which translates into pricing that directly affects investment in construction.

Canada is also seeing declining business investment, (down 16% in the first quarter), and declining exports in both first and second quarters. Irrespective of economic conditions, Quantity Surveyors and Estimators continue to assist clients during times of economic uncertainty. As one fellow professional told me recently, “We are either busy or working very hard to become busy,” in the context of helping clients find solutions to the many challenges that supply, revenue and cost economics throw up. Specifically, most construction companies are looking at how they can drive up or maintain revenues, reduce costs and achieve financial targets demanded by their shareholders and/ or ownership. So, whether we like it or not, we are in a period of change and this brings along uncertainty, opportunity and the need to align with a changing business environment.

For construction, challenges include facing increased financial scrutiny of projects that are underway. Other projects in the pipeline awaiting sanction are undergoing more detailed review processes before being released for design and construction. As revenues come under inward pressure, businesses are having a closer look at costs and efficiencies.

Many organizations are using these opportunities to streamline their operations and professionals are undergoing a process of self-assessment as they seek to

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achieve their own professional objectives.

In my view, Quantity Surveyors are very well positioned to not only advise on projects being delivered, but also on those suffering uncertainty or being ‘put on ice.’

Our profession is one that supports the client’s asset from inception to completion and well into the operational phase. Companies and clients served by Quantity Surveyors have the common objective of driving up or maintaining revenues, reducing costs and achieving financial targets demanded by their shareholders and/or ownership. Previous slowdowns in economic activity have shown that companies in the construction sector come out stronger and ‘leaner’ as they take the opportunity to revisit their business base and outcome objectives.

We are not just a profession for the good times, we are equally if not better positioned to apply our expertise in times of economic uncertainty, especially as businesses realign. As Patrick S. Keough, the 8th CIQS President (1968-1969) said, “Publicize your profession and your Institute at every opportune time. Let it be known that we are an important part of the construction Industry.” For us today, this is particularly relevant as our industry faces challenges on infrastructure spending, labour supply and training.

Whilst economic uncertainty continues to augment the inherent challenges that construction always seems to attract, the profession of quantity surveying and estimating is very well positioned to assist in the process of aligning economics to business needs.

I thank you for your support and contribution to the Construction Economist, and sincerely wish you and your families are having a truly wonderful Fall. If you have feedback, suggestions and of course any articles that you would like to be considered for publication, please email: editor@ciqs.org.

Letters to the Editor Dear Editor, I noticed when I paid my last membership invoice there was an affiliate portion and a national portion. Is this something new as I do not recall paying two portions in the past? Can I pay for just one? And what is my membership dues used for by national versus my affiliate? Then, just last week I was speaking to a colleague in a different affiliate and she informed me that her dues were less than mine. Well, this came as a complete shock to me as I also thought everyone would pay the same dues no matter where they live. I would like some explanation as to this variance.

Signed: Singing the Membership Dues Blues

Response: Dear Singing the Membership Dues Blues: Thank you for your questions regarding membership. CIQS receives membership renewal questions quite frequently.

There has always been a national portion and an affiliate portion of the membership renewals and CIQS only recently began to show the breakdown on the annual invoice. Prior to 2015, your affiliate collected your membership renewal and sent the national portion back to CIQS. The national portion for each category is the same across the board no matter where you live. In order to streamline the renewal process, CIQS determined it would be more efficient to collect all the membership renewals nationally and submit the affiliate portions once the fees were collected.

Unfortunately you cannot pay for just one portion and this is to allow the affiliates to carry funds to operate each local office while allowing national to continue to administer the education program, PR and marketing initiatives, website, membership renewals and assessments.

By removing the administrative burden of collecting membership renewals and new membership assessments from each affiliate, the affiliates can now focus on promoting quantity surveying locally, service the affiliate membership and provide the regional voice at the national level.

Regarding the differences in fees from one affiliate to another, this is an issue

national and the affiliates are trying to resolve. The challenge is currently each affiliate has different administrative needs (and costs) where the larger affiliates have staff to manage their operations, and the smaller affiliates may operate completely on a volunteer basis.

The opportunities lie in striking a balance of cost sharing to operate each

affiliate as well as the national office.

Standardizing renewal fees is inevitable but with all change, it may take some time to implement.

Signed: Matt Weber, Finance Committee Chair CIQS National Board

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Fall 2015 | www.ciqs.org | CONSTRUCTION ECONOMIST | 9

Legal Corner

Professional liability for Cost Consultants

Exposure, liability and mitigation – Overview Preamble Legal pundits maintain that litigation in the construction industry is on the rise.

If true, the reasons for this trend are presumably multifaceted and include the increasing size and complexity of projects and the demand for accelerated completion which have surely contributed to the trend. In meeting these increased demands, the construction industry is reliant on various professionals to deliver services on time and without error. These expectations have fostered a generation of highly specialized professionals who focus on meeting deliverables at a premium cost. For the client, the increased service cost means greater expectations and, if not met, an entitlement to financial recovery through legal recourse.

Although the job function of Professional Quantity Surveyors and Construction Estimators (I will collectively refer to them as ‘Cost Consultants’) is highly technical, they historically have been less susceptible to legal action for professional liability as compared to other construction professionals. In fact, Cost Consultants are more likely to see legal action in dispute resolution, as adjudicators or as expert witnesses in Court. That being said, as the use of and reliance on Cost Consultants becomes more prevalent to meet industry demands, the risk of professional liability will increase. This is especially true for larger players in the industry as claimants will want to take advantage of deep pockets and E&O insurance policies.

This article should serve as a reminder of practices that mitigate risk and keep away unpleasant litigation.

Contract versus Tort There are two bases of liability: contract liability and professional negligence.

In the case of contract liability, contracts

contain various terms that impose contractual obligations and standards on professionals. If a contract fails to express the same, our legal system implies that professional services shall be provided to a standard that would protect the integrity and purpose of the contract.

If the contracted or implied obligations are not met, the professional may be sued for breach of contract.

If there is no written or verbal contract for professional services, then a claimant must sue a professional in tort, which is a system of law that allows recovery from those whose actions have resulted in damages. For professional negligence to be established, three conditions must be met. First, the professional owed the claimant a duty of care. Second, the professional’s conduct breached the duty of care by falling below the standard of care. Third, the professional’s conduct caused loss to the claimant. This occurs in situations where, for example, a Cost Consultant is retained by an Architect, but still owes the owner a duty to provide adequate services. The majority of cases against a Cost Consultant will be for contract liability. Regardless of whether the legal action is in contract or tort, the standard of care is central in determining if a professional’s conduct should attract legal culpability.

Standard of Care The standard of care is the threshold used to determine if a professional’s conduct should attract legal culpability.

It is an objective standard that begs the hypothetical question of “whether other persons exercising the same profession or calling and, being men of experience and skill therein, would or would not have come to the same conclusions as the Defendants” (Chapman v. Walton (1983) 10 Bing, 57, cited in Building

10 | CONSTRUCTION ECONOMIST | www.ciqs.org | Fall 2015

Harp Khukh

Contracts 4th Ed. Keating, 1978). In other words, if a professional with similar experience and skill would have come to similar conclusions and provided similar services, then no liability would be found. The standard of care differs from profession to profession, but there are some common principles. Past legal decisions and precedents tell us the following about the standard of care: • Standard: A professional is held to a higher standard than a lay person (Hilton Canada v S.N.C. Lavalin Inc. (1999, N.S.J. No.188)); • Competence: The standard is of a professional with average professional competence (Hilton Canada v S.N.C. Lavalin Inc. (1999, N.S.J. No.188)); • Comparison: A professional should not be compared to the most skilled person in the field (Hilton Canada v S.N.C. Lavalin Inc. (1999, N.S.J. No.188)); • Perfection: A professional should not be held to a standard of perfection (Trizec Equities Ltd. V. Ellis-Don (1998, A.J. No. 179)); • Conduct: An error or mistake does not result in liability if others in the field would have acted in the same manner (Lapointe v Hopital Le Gardeur (1992, 90 D.L.R. (4th) 7); • Mistake v. Judgment: Courts distinguish between conduct that is incompetent and an “error in judgment”. Not every error in judgment will result in negligence (Lapointe v Hopital Le Gardeur (1992, 90 D.L.R. (4th) 7); • Expertise: The standard may increase if a professional represents special skills or expertise in a contract or verbal and written communication (B.C. Rail Ltd. v C.P. Consulting Services Ltd. (1990, 41 C.L.R. 89).

To illustrate how the standard of care is applied in practice, let us assume a

Cost Consultant is retained to assess the financial feasibility of a hotel development and he or she mistakenly fails to consider the HVAC material and labour costs because the owner fails to provide this documentation. Based on the projections, the project is put out to tender and all bids received are higher than the estimate. As a result, the owner is unable to fund the project despite spending time and resources to get to the tender stage. The owner then commences an action against the Cost Consultant for the wasted resources.

The owner’s case would be proven by the use of an independent Cost Consultant acting as an expert witness. The ideal expert would have extensive field experience in completing feasibility studies for similar types of projects. The expert would call upon his own experiences and industry knowledge to determine if the mistake failed to meet industry standards.

In establishing the requisite standard, the expert would likely compare the conduct to professional guidelines, statutes, codes, by-laws and regulations.

Legal Cases1 In order to determine the type of errors that would attract liability, we must look to past legal decisions. Given there are limited reported cases in Canada relating to Cost Consultants, we look to the United Kingdom where there are numerous legal decisions that apply to Cost Consultants. As our legal system is developed from English common law, the following decisions would be considered persuasive authority in Canada.

• Failure to Warn: In Flanagan v Mate, (1876) 2 Vict LR 157, the Quantity Surveyor who performed an estimate for a project was found at fault for failing to warn the owner that his budget could not be achieved.

• Duty to Prepare: In Keete v King, (1938) EJ 65, the Quantity Surveyor failed to include shoring costs in the bill of quantities. The court found that the Quantity Surveyor had a duty to prepare complete contract documents.

• Negligent Estimate: In Savage v Board of School Trustees, (1951) 3 TLR 39, a

Quantity Surveyor was found negligent for his estimate which resulted in an undervalued tender.

• Human Errors: In Tyrer v District Auditor of Monmouthshire, (1973) 230 EG 973, a Quantity Surveyor was found liable for simple mathematical errors and issuing overpayments to Contractors. This case confirms that simple human error can attract liability.

Limitations The Limitations Act, 2002, sets a two-year period to pursue legal action against a professional. The two-year time limit begins when the claimant becomes aware of the deficient services or the damages caused by the deficient services. The Act also sets an ultimate limitation period of 15 years, which is when the cause of action for deficient services is extinguished.

Mitigation • The risk of professional liability is best mitigated with sound day-to-day professional practices. The following is a non-exhaustive list of best practices: • Work within your field of expertise.

• Acknowledge your limitations in experience when accepting work.

• Clearly define the scope of services in written contracts.

• Ensure the client understands the scope of services.

• Manage client expectations for the scope of services.

• Clearly define the deliverables and timelines, where possible.

• Clearly define the information you require to achieve the deliverables.

• Do not guarantee results or make promises that cannot be achieved.

• Prepare clear, concise and well-written reports.

• Encourage the use of peer reviews and other quality management tools.

• Keep draft work and calculations to justify opinions.

• Ensure reports mention assumptions, limitations and reliance on third party documents.

• Ensure reports mention future contingencies, where required.

• Ensure the client understands the reports and opinions.

• Maintain a project file with all documents, correspondence, field notes and draft work.

• Document client meetings and send copies to the client.

• Document important verbal communication on the project.

• Carefully review the work of aspiring professionals, including associate members, students and staff.

• Regularly review statutes, codes and regulations.

• Regularly discuss industry trends with colleagues, participate in industry groups and read professional journals.

• Seek mentorship from more experienced professionals.

• Immediately inform your insurer of any possible legal issues.

Further to the above list, without exempting each and every cost consulting firm to carry out its own due diligence, the Canadian Association of Consulting Quantity Surveyors released a Cost Management Best Practices Guide in 2014. The Guide was written by senior representatives in the industry and is an available resource for Cost Consultants or others in the construction industry and can be found at http://cacqs.ca under ‘Best Practices.’

The United Kingdom case law was referred to in an article entitled Identifying and managing your legal expectations to avoid legal pitfalls in an increasingly demoing project role

by Nicolas Gould of Fenwick Elliott LLP (London, UK).

1

About the author Harp practices law at Corestone Law and his practice exclusively focuses on construction, property and professional liability. This article is meant as an overview for information purposes only and does not constitute legal advice. For any questions or concerns, please contact the author at harp@corestone.ca.

Fall 2015 | www.ciqs.org | CONSTRUCTION ECONOMIST | 11

Education Corner

Changes to the TPE requirements David Lai, PQS (F)

T

he following education related items were discussed at the last CIQS Council meeting that was held at the end of August 2015: • The final results of the May, 2015 examinations were 74% pass and 26% failure.

• As of the end of August 2015, the registration for the November examination session is 33 candidates registered for 65 examinations.

• The CIQS Council created a new education achievement award in recognition of the invaluable work done by Mr. Graham Randall, PQS (F) in assessing the TPE diaries over the years.

The Graham Randall Award will be given to the candidate with the highest mark over 75% in subject A/M/E 303 – Pricing and Bidding Procedures.

• From April 1, 2015 to August 31, 2015 the Membership Committee reviewed 241 new applications and 14 re-assessment requests from existing members. The number of new applications excludes student membership.

• The application fees for examinations, TPE components such

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as diary submissions, etc. have increased. Please refer to the Education Policy Guidance Notes #A1 in the ‘Members Only’ section of the CIQS website for the new fees.

• Changes to the TPE requirements for CEC/ECC and PQS/ ECA. The requirements have changed and will impact members who have not yet graduated to the CEC/ECC and PQS/ECA professional levels. Please refer to the Education Policy Guidance Notes #B1 to #B12 in the ‘Members Only’ section of the CIQS website for full details.

I am sure that many members will be wondering what the changes to the TPE requirements are and how it will impact their transition to the professional membership levels. The primary change is that the TPE diary time has been reduced by 50% but members seeking the PQS/ECA designation are now required to attend a professional interview. However, the professional interview may be waived depending on the TPE route taken.

If you have any questions after reading the Educational Policy Guidance Notes #B1 to #B12, please contact me at education@ciqs.org.

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Test of Professional Experience (TPE) Current Membership Category

Membership Category Upgrading To

Academic Background

Educational Policy Guidance Note Number(s)

TPE Route #

Associate

PQS

Graduate from Fully Accredited Program

B3

#1

Associate

CEC

Graduate from Fully Accredited Program

B3

CEC

PQS

Graduate from Fully Accredited Program

Associate

PQS

Associate

Part B Structured Training Minimum Approved Working Experience

TPE Diary Type

Part C Practice Problem

Part D Professional Interview

Exempted

3,600 hrs (2 yrs.)

D3

Required

Required

#2a

Exempted

3,600 hrs (2 yrs.)

D1

N/A

N/A

B3

#2b

Exempted

Additional 1,800 hrs (1 yr.)

D2

Required

Required

Graduate from Partially Accredited Program

B4

#3

Any outstanding subjects of the 25 required by CIQS

3,600 hrs (2 yrs.)

D3

Required

Required

CEC

Graduate from Partially Accredited Program

B4

#4a

Any outstanding subjects of the 14 required by CIQS

3,600 hrs (2 yrs.)

D1

N/A

N/A

CEC

PQS

Graduate from Partially Accredited Program

B4

#4b

Any outstanding subjects of the 25 required by CIQS

Additional 1,800 hrs (1 yr.)

D2

Required

Required

Associate

CEC

Recognized Mechanical or Electrical Engineering Degree

B5

#5

Exempted

3,600 hrs (2 yrs.) in QS role

D1

N/A

N/A

Associate

CEC

Recognized Mechanical or Electrical Technology Diploma

B5

#5

Exempted

5,400 hrs (3 yrs.) in QS role

D1

N/A

N/A

Associate

CEC

Recognized Mechanical or Electrical Technician or Mechanical or Electrical Drafting Diploma

B5

#5

Exempted

7,200 hrs (4 yrs.) in QS role

D1

N/A

N/A

Associate

CEC

Mechanical or Electrical trade certification, etc.

B5

#5

Exempted

7,200 hrs (4 yrs.) in QS role

D1

N/A

N/A

CEC (M or E)

PQS

Coming through TPE Route #5

B5

#6

Any outstanding subjects as determined by CIQS

Additional 1,800 hrs (1 yr.)

D2

Required

Required

Direct Finalist

CEC

N/A

B6

#7

Subjects 302, 303 & 304 (all disciplines)

Must have minimum 15 yrs. of approved working experience

N/A

N/A

N/A

Direct Finalist

PQS

N/A

B6

#8

Subjects 302, 303, 304, 308 & 309 (all disciplines)

Must have minimum 15 yrs. of approved working experience

N/A

Required

Required

Mature Candidate (automatically gets CEC)

PQS

N/A

B7

#9

2 - Written Papers plus Professional Interview

Must have minimum 20 yrs. of approved working experience

N/A

Section (a) of Practice problem

Included in part A

Associate

PQS

Equivalent Professional Qualification as determined by CIQS

B8

#10

N/A

1,800 hrs (1 yr.) in QS role

N/A

Section (a) of Practice problem

Required

MRICS

PQS

Primary RICS discipline must be QS

B9

#11

Exempted

Exempted

Exempted

Exempted

Exempted

AssocRICS

CEC

Primary RICS discipline must be QS

B9

#11

As determined by CIQS

As determined by CIQS

As determined

by CIQS

N/A

N/A

AssocRICS

PQS

Primary RICS discipline must be QS

B9

#11

As determined by CIQS

As determined by CIQS

As determined

by CIQS

Required

Required

Equivalent Professional Qualification through Reciprocity Agreement

PQS

Primary discipline must be QS

B10

Reciprocity Agreement

Exempted

1,800 hrs (1 yr.)

Exempted

Section (a) of Practice problem

Required

Gold Seal Certified Estimators (Automatically gets CEC)

PQS

Certification Agreement with CCA

B11

#8

Subjects 302, 303, 304, 308 & 309 (all disciplines)

Exempted

Exempted

Required

Required

Associate

CEC

Graduate of Construction/QS related program

B12

#12a

14 subjects as 10,800 hrs (6 yrs.) in determined by CIQS QS role

Summary must be submiitted

Upto 4 case studies & 3 sponsors

N/A

Associate

PQS

Graduate of Construction/QS related program

B12

#12b

25 subjects as 12,600 hrs (7 yrs.) in determined by CIQS QS role

Summary must be submiitted

Upto 4 case studies & 3 sponsors

Required

Part A (Academics)

Fall 2015 | www.ciqs.org | CONSTRUCTION ECONOMIST | 13

MAJOR PROJECT OVERVIEW:

New Champlain Bridge Corridor ACHIEVEMENT OF FINANCIAL CLOSE The Champlain Bridge over the St. Lawrence River links the City of Brossard on the South Shore, to the City of Montréal’s Verdun borough.

It is one of the busiest crossings in Canada, used annually by over 40 million vehicles. An important component of the Continental Gateway corridor, the bridge also facilitates the transit of close to $20 billion of trade every year.

The Champlain Bridge is the most important component of a highway corridor between downtown Montréal and the South Shore and is part of the New Champlain Bridge Corridor (NCBC) which will cost approximately $4.2 billion and include: • New Champlain Bridge (NCB): 6 lanes, 3.4 km long bridge linking Nuns’ Island to Brossard on the South Shore; • New Nuns’ Island Bridge: 6 lanes, 468 m long bridge linking the Island of Montréal to Nuns’ Island; and • Highway 15: 6 lanes, 3 km long highway linking the Nuns’ Island Bridge to the Quebec Ministry of Transport’s Turcot Interchange.

With a proposed lifespan of 125 years, and given its strategic location in Montréal and its key role in the regional economy, the NCB will represent a significant federal legacy

in the region and will contribute to the economic prosperity of the neighboring communities, the City of Montréal and Canada as a whole.

The Montreal Infrastructure and Project Finance practice of PricewaterhouseCoopers LLP led a consortium consisting of Steer Davies Gleave and Arup to provide technical and financial advice to Infrastructure Canada as follows: • Traffic and revenue forecasting for the tolling portion of the bridge; • Identifying the preferred technical solution for the NCBC (e.g. lane configuration, bridge design, traffic mitigation, bridge demolition solution, public transit solution and integration, etc.) and the related project costs; • Input to project planning and development of a business case; • Determining value for money to Canada; • Assessment of the Canadian market funding capacity for a project of the size of the NCBC; • Conducting risk analysis in order to determine the level of risk shared between the public and private sectors; • Conduct a market sounding to determine the market appetite for the project structure, procurement model and bankability of the envisioned solution;

14 | CONSTRUCTION ECONOMIST | www.ciqs.org | Fall 2015

• Assistance on the integration of architectural considerations to the most important gateway to a major Canadian city; • Providing assistance in the drafting of the procurement documentation (Request for Qualification (RFQ), Request for proposals (RFP), project agreement (PA), payment mechanism); • Financial evaluation of RFQ and RFP submissions; • Assistance through financial close.

The project is currently under construction and the major project milestones were as follows: • March 2014: RFQ launch; • May to June 2014: RFQ evaluation and selection of three proponents; • July 2014: RFP launch; • August 2014 to January 2015: RFP bid preparation, including nine bilateral confidential commercial meetings and three rounds of proponent comments on the draft PA that will govern the Public-Private-Partnership; • January 2015: Issuance of the final version of the PA; • February 2015: RFP technical submission; • April 2015: RFP financial submission and announcement of preferred proponent; • June 19, 2015: financial close.

The Montréal Infrastructure and Project Finance

TEAM BIO

Here is a brief bio of our Montréal Infrastructure and Project Finance team members:

Johanne Mullen, MBA Partner, Leader of the Canadian Infrastructure and Project Finance (IPF) Group

Richard Deslauriers, CPA Partner, Infrastructure and Project Finance

Alexandre Prokhoroff, MBA Director, Infrastructure and Project Finance

Tri Dung Paul Mai, MSc., CFA Director, Infrastructure and Project Finance

Jacynthe Audette, MBA Director, Infrastructure and Project Finance

Johanne Mullen has 20 years of experience in the areas of capital project advisory, complex procurement advisory, project finance and public-private partnerships. She has worked with both the public and private sectors in structuring large projects in the transportation, health and urban infrastructure sectors. Johanne is a director and past president of the Institut pour les partenariats public-privé du Québec and a Director of the Canadian Council for Public Private Partnerships.

Prior to joining PricewaterhouseCoopers Financial Advisory Services Practice in February 2000, Ms. Mullen was with the Export Development Corporation where she served in several roles related to finance and lending. From 1995 to 2000, she focused on the transportation industry, structuring and arranging international financing in the rail and aerospace sectors.

Richard Deslauriers leads PwC’s IPF group in Montréal. He has over 15 years of experience in the areas of infrastructure projects, public-private partnerships and project financing. He has advised both government and private sector clients in the areas of project structuring, finance raising, project analysis and public procurement processes.

Alexandre acts as a financing specialist advising private and public sector clients. His activities include project financing structuring, commercial negotiations, capital market advisory, and financial risk analysis.

He has 14 years of experience in financial advisory and structuring financing in corporate and project finance environments. He holds an MBA from the University of Cambridge (UK), where he was Judge Business School Director’s Scholar, and St. Catharine’s College Benavitch Scholar.

Paul joined the IPF team of PwC in Montréal in 2010. He recently completed the procurement phase of the Champlain Bridge replacement project in Montréal (C$4.2B). Paul is a specialist in financial modeling and value-for-money analysis within the context of infrastructure projects across Canada.

Before PwC, Paul spent two years working in the London office of the Asset Backed Investment team of Shinsei Bank. Paul has over ten years of experience and his knowledge spans many industries such as healthcare, energy, rail and social infrastructure. Paul holds a Masters in finance from the London Business School in the UK and also obtained the CFA designation.

Jacynthe Audette is a Director at PwC in Montréal. She holds a Master’s degree in Business Administration (MBA) from the University of Ottawa and has over ten years of experience working with infrastructure projects in both Quebec and internationally, including transportation projects sponsored by the World Bank. Jacynthe has participated in many financial analyses and procurement processes for complex, highly publicized infrastructure projects in various sectors, including accommodation, transportation, health, energy, and mining.

1250 René Lévesque Boulevard West, Suite 2800 | Montréal, Québec H3B 2G4 | Telephone: 1.514.205.5000 | Fax: 1.514.938.5709

New RICS-CIQS project monitoring guidance will fill important need for

CANADIAN INDUSTRY AND LENDERS

By Tom Pienaar, Head of Corporate Affairs, Americas, RICS

CIQS and RICS have joined forces to address a gap facing the Canadian construction industry. Currently, there is no way to ensure that when a lending institution uses a project monitor for one or more projects, the professional is following appropriate due diligence and working to specific standards covering all the key risks. Some mechanism is needed to provide this assurance because lending institutions often lack the institutional knowledge or capability to analyze and track the construction process, especially for large or multiple construction projects. This in turn can create potential vulnerabilities due to a lack of transparency and increased risk.

An effective project monitor can increase transparency and reduce risk, and in the process can help identify potential issues with contract compliance, schedule and budget earlier in the process, protecting the lending institution’s position in the project. As a result of this need, RICS and

CIQS have developed a project monitoring guidance note (entitled Project Monitoring for Real Estate Lending: Canada) that will be issued later this year and will be available online at rics.org and ciqs.org.

The Canadian construction industry has been seeking assistance with this challenge for some time. The genesis for the guidance came from discussions with leading quantity surveyors and construction finance heads from Canadian banks, who concluded that across Canada, there was no accepted standard of practice for independent project monitors undertaking oversight of commercial construction loans. “As the Canadian real estate industry seeks global lenders and developers, it is of paramount importance for project monitors to conduct the appropriate level of due diligence in a consistent manner with the highest standards,” says Naren Chande, FRICS, PQS (F), who chairs the working group that is developing the

“Project Monitoring for Real Estate Lending: Canada will be issued later this year and will be available online at rics.org and ciqs.org.”

16 | CONSTRUCTION ECONOMIST | www.ciqs.org | Fall 2015

guidance and is senior executive vice president for cost consulting at Altus Group, Toronto, a leading provider of independent advisory service, software and data solutions to the global commercial real estate industry.

“Our goal with the guidance is to establish a standard within the industry so that lenders can be confident they are receiving a high-quality project monitoring service, and better understand what to expect from RICS members and other service providers,” says Chande. When the guidance is published, “project monitors will have a common platform that can be used as reference for their work,” says Chande. “This document will act as a definitive resource to help lenders and project monitors better service the requirements of the development industry.” CIQS’ lead representative on the working group says the guidance should boost both consistency and quality in project monitoring. “In recent years in Canada, we have observed substantial variations in the level of detail and quality of project finance monitoring among different quantity surveying firms,” says Matthew K. Weber, AScT, PQS, CIQS’

“CIQS is pleased to be collaborating with RICS on completing the Project Monitoring Guidance to set the standard across Canada for the level of detail and quality expected from our members and designation holders.” current vice chair and treasurer, who is vice president of the Concosts Group of Companies, Burnaby, B.C. “This has led to clients being uncertain about the level of service they will receive when they engage a professional quantity surveyor or chartered surveyor to monitor a real estate development. Furthermore, this has resulted in inconsistent proposal bidding and a race to the bottom on fees for professional services, which directly impacts the quality of deliverables.

When owners, lenders and developers experience a lack of quality – real or perceived – our legitimacy as a necessary and respected part of the industry is eroded,” Weber adds. “CIQS is pleased to be collaborating with RICS on completing the Project Monitoring Guidance to set the standard across Canada for the level of detail and quality expected from our members and designation holders.”

A senior official with a major lender cites several reasons project monitors are valuable, and not just to the bank.

“On a project of just about any size, we like to have a project monitor,” says Rod Hunt, managing director for real estate lending with the Royal Bank of Canada, Toronto. “In addition to protecting the bank, project monitors are valuable to the client: They are another set of eyes to make sure that the budget and schedule are reasonable, and that a project is being carried out per the planned budget and schedule from month to month.”

Further, “If there is a problem (such as a cost overrun, for example), a project monitor can identify it early and give the client a chance to remedy it sooner rather than later and hopefully keep it a small problem,” Hunt continues.

“In addition, project monitors will see an item in a project budget that does not make sense – for example, the cost listed is too low or high – and question it if necessary. Then, the developer can go back and question his contractor to make sure that the costs are in line.”

Another lender, Garth Stoll, vice president of HBSC’s Real Estate Group

in Vancouver, says, “project monitoring is part of due diligence expected of us internally and externally, and it is just good business to get a hopefully objective third party opinion on the status of a particular project. As confident as I am in lenders, they are not engineers or involved on day-to-day basis in construction projects, so we want to get an assessment from an expert in that field.” RICS’ Canada chair, who is a developer and has a significant track record in project monitoring, also believes the guidance should help considerably. “After nearly 19 years of undertaking project monitoring in Canada on behalf of lenders and now being in the position of hiring project monitors as a development manager, I am very happy that the industry has collaborated to undertake and complete this guidance document,” said Steve Elias, FRICS, PQS, managing partner with redM Group, Vancouver. “For such an established process in Canada, the lack of uniformity in the requests for the scope of work and cost consultants from various lenders has been challenging at times over the years,” Elias adds. “This document now clarifies the scope of work for the cost consultant, the lender and the developer who is paying for the service. The guidance will minimize disputes and allows all three parties to know exactly what is being reviewed during the project to facilitate the flow of construction funding each month.”

Core project monitoring services: After providing background information as well as key elements of a project monitoring contract, the guidance defines the scope of the core services a project monitor should provide: Core project monitoring services fall into three categories: • Regulatory Review, such as verifying permits and regulatory compliance and checking for factors such as easements.

• Financial Review, including analyzing, reviewing and monitoring financial aspects such as the loan agreement, purchase agreement, leases (if applicable), budget and

budget variances, construction schedule, site progress (verified by site visits) and change orders.

• Technical Review, which includes the consultant’s quality control reports, commissioning reports, geotechnical and environmental reports, and the project manual.

The development of this industry guidance has been aided significantly by the relationships, input and feedback from the lenders – the profession’s ultimate clients. This initiative will provide a step forward in terms of industry benchmarks, but may also not be the last step in this effort. Earlier this year in Washington D.C., a group of key construction industry associations from around the world, including the RICS and CIQS gathered to discuss the need for International Construction Measurement Standards. Representatives from these organizations are continuing discussions on global industry standards that would normalize the understanding of key cost factors in a construction project, enabling more accurate cost measurement.

ABOUT THE AUTHOR Tom Pienaar is Head of Corporate Affairs, Americas, RICS. Tom has worked in real estate and construction for 15 years, in housing law, investment, regeneration, and then managing policy, public affairs and public relations campaigns for developers and government agencies. Tom leads the RICS Corporate Affairs Team in the Americas, focusing on developing mutually beneficial relationships with industry stakeholders. During his six years with RICS Tom has worked across the international industry, in Europe, China and Brazil. For more information, please contact Tom at Tpienaar@rics.org.

Fall 2015 | www.ciqs.org | CONSTRUCTION ECONOMIST | 17

New affiliated association in Nouvelle association affiliée au

Québec

Comme nous l’avons déjà indiqué, As reported previously, a une réunion de l’Association des meeting of the Association estimateurs et des économistes of Estimators and Quantity de la construction du Québec Surveyors of Québec (AEÉCQ) (AEÉCQ) (connue par le passé (formerly known as Canadian sous le nom de l’Institut canadien Institute of Quantity Surveyors des économistes en construction - Québec) was held on - Québec) a eu lieu le 10 mars March 10, 2015 and at that 2015. Lors de cette réunion, la meeting the decision was décision de cesser les relations made by those present to avec l’Institut canadien des cease relations with the économistes en construction Canadian Institute of Quantity (ICÉC) a été prise par les Surveyors (CIQS). personnes présentes.

Despite this decision by Craig Bye, CIQS Chair and Guillaume Robitalle, CIQS - Québec President, signing governance documents re: formation of the Malgré la décision de l’AEÉCQ, AEÉCQ, CIQS continued new affiliated association in Québec. l’ICÉC a continué de reconnaître to recognize our registered ses praticiens agréés au Québec practitioners in Québec in afin de leur permettre de continuer à utiliser leur désignation order to allow them to continue using their professional professionnelle ÉCA/PQS et ECC/CEC. designations - ÉCA/PQS and ECC/CEC. Le Conseil d’administration de l’ICÉC est maintenant heureux The CIQS Board of Directors is now pleased to announce d’annoncer qu’une nouvelle association affiliée a été formée au that a new affiliated association has been formed in Québec Québec - ICÉC - Québec.

- CIQS - Québec.

The new association’s founding members are: • Guillaume Robitaille, PQS, CIQS – Québec, Chair and representative on the CIQS National Board • Louis Lebeau, PQS, CIQS – Québec, Vice Chair • Sergio Callocchia, PQS, CIQS – Québec, Secretary • Yvon Chabot, PQS, CIQS – Québec, Treasurer

Les membres fondateurs de l’association sont: • Guillaume Robitaille, ÉCA, ICÉC – Québec,Président et représentant au Conseil national • Louis Lebeau, ÉCA, ICÉC – Québec, Vice président • Sergio Callocchia, ÉCA, ICÉC – Québec, Secrétaire • Yvon Chabot, ÉCA, ICÉC – Québec, Trésorier

All governance documents (by-laws, affiliate agreement, etc.) were finalized and signed by both parties prior to the CIQS Board meeting August 28, 2015.

Funds that had been collected have been transferred from CIQS to the new CIQS - Québec on behalf of the Designation Holders who renewed their membership with CIQS for 2015/16.

Craig Bye, CIQS Chair, stated, “It was extremely disappointing that the former Québec association decided to cease their relationship with CIQS, however, we were delighted when a group of Designation Holders in Québec reached out to CIQS to form a new affiliated association.

The new group values CIQS and their designations and we are pleased to have Québec back at the table.”

If you have any questions, please do not hesitate to contact the CIQS Chair, Craig Bye at chair@ciqs.org, Guillaume Robitaille at ciqsqcdir@ciqs.org or Lois Metcalfe at execdir@ciqs.org.

Please note that AEÉCQ are not a member of CIQS or have any association or affiliation with CIQS.

Tous les documents administratifs (règlements, accord d’affiliation, etc...) ont été finalisés et signés par les deux parties avant la réunion du Conseil de l’ICÉC du 28 août 2015.

Les fonds recueillis ont été transférés de l’ICÉC vers la nouvelle association ICÉC - Québec au nom des détenteurs de désignation qui ont renouvelé leur adhésion avec l’ICÉC pour la période 2015/16.

Le président de l’ICÉC, Craig Bye, a déclaré « Il s’avère extrêmement décevant que l’ancienne association du Québec ait décidé de rompre toute relation avec l’ICÉC, cependant nous sommes ravis qu’un groupe de détenteurs de désignation au Québec ait tendu la main à l’ICÉC pour former une nouvelle association affiliée. Le nouveau groupe valorise l’ICÉC et ses désignations.

Nous sommes heureux d’avoir le Québec de retour à la table. » Si vous avez des questions, veuillez contacter le président de l’ICÉC, Craig Bye, à l’adresse chair@ciqs.org, ou Guillaume Robitaille à l’adresse ciqsqcdir@ciqs.org ou moi-même à l’adresse execdir@ciqs.org.

Veuillez noter que l’AEÉCQ n’est pas membre de l’ICÉC et qu’elle n’est pas associée, ni affiliée à l’ICÉC.

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In Memoriam Fred Schiebe The CIQS sadly announces the passing of member Fred Schiebe on July 28, 2015 at age 70.

Born in Cape Town, South Africa, Fred immigrated to Canada in 1969.

He earned multiple Tradesman’s Qualifications in BC and Alberta. Fred joined the CIQS on May 28, 2002 and received his PQS diploma from the Quantity Surveyors of BC on May 24, 2003. He worked with BTY Group from 2004 until his retirement in 2014.

The tradesman experience served Fred well as he took a lead role in developing BTY’s Building Services Division. Known for his love of fine red wines and dancing with abandon, Fred mentored a generation of colleagues in the finer points of costing M&E, and was a staunch CIQS supporter, attending most AGMs for a decade.

“Fred was a longtime friend, employee and colleague at BTY,” said Joe Rekab, the firm’s Managing Partner.

“We will all miss him.”

Fred leaves behind his wife of 48 years, Ruth, son Glen (Joslin), daughter Tracy (Alex) and three grandchildren: Jeffery, Aaron and Sarah. Fred was especially devoted to grandson Aaron, often taking time off to drive him to baseball tournaments.

Fred and Ruth enjoying the 2006 CIQS AGM in the Bahamas

Fall 2015 | www.ciqs.org | CONSTRUCTION ECONOMIST | 19

Report on the CIQS 2015 Congress

By Lois Metcalfe

The 2nd annual CIQS Congress, held at the beautiful Melia Nassau Beach resort in the Bahamas from July 9-11, 2015, kicked off on Thursday, July 9 with a presentation by our Keynote Speaker Deputy Prime Minister Phillip Davis on The Role of Public Private Partnerships the Effective Delivery of Infrastructure Projects. This was followed by our luncheon speaker, Mr. Paul Worrell, a local Quantity Surveyor who spoke to the delegates about Challenges (Risks and Opportunities) Facing the Quantity Surveyors in 2015 with Special Focus on the Caribbean and the Bahamas.

On Friday, the CIQS Board of Directors started the day with a Board meeting.

In the afternoon, the Board presented A Year in Review – Information Session to all Designation Holders. This session highlighted the financial report for the year and the various committee accomplishments over the past year.

Dave Burns accepted his Fellowship certificate from Past President, George Evans

Delegates enjoying the welcome reception

Sheri Thompson accepting Lenny Simonelli’s Fellowship certificate on his behalf from Past President, George Evans

Following the presentation, the Chair Dave Burns fielded questions and comments from the floor.

At the end of the Information Session, the Chair presented Lenny Simonelli’s fellowship certificate to CIQS – Ontario President, Sheri Thompson who accepted on Lenny’s behalf. Past Chair, Mark Gardin, presented the Chair, Dave Burns, with his fellowship certificate.

Congratulations to Lenny and Dave for achieving Fellowship. For a list of CIQS Fellows and criteria please visit the Members Only section of our website.

The Chair also announced that Michael Bernier from CIQS – Prairies and NWT and Joshua Mutize, a CIQS Member at Large, were awarded the prestigious Gordon Pattison Award of Merit. Michael was present to receive his award personally.

Mark Gardin, Past Chair, accepted the award on behalf of Joshua Mutize who

George Evans presenting Michael Bernier with Gordon Pattison Award of Merit

Joanne Cantin and Doreen Campbell enjoying the sites in Nassau

20 | CONSTRUCTION ECONOMIST | www.ciqs.org | Fall 2015

was not present. Congratulations to Michael and Joshua on their award. For information on the Gordon Pattison Award of Merit please visit the Members Only section of our website.

A small group participated in the Clive Evans Living Golf Tournament at the Ocean Club Golf Course. George Evans once again walked off with the trophy! The event was capped off by an engaging crowd at the President’s Dinner on Saturday evening. On behalf of the CIQS, I would like to thank all delegates for attending, our speakers for their time and insight and the Organizing Committee (Ian Duncan, Roy Lewis and Elouise Fernandez) for their hard work. Without all of you, the event would not have been such a success. Next year’s CIQS Congress will be hosted by CIQS – Ontario on June 24-26, 2016 at the Old Mill in Toronto (see page 22 for further details).

Mark Gardin, Past Chair, presenting Dave Burns with a plaque acknowledging his service as CIQS Chair for 2014/15

CIQS Past Presidents and Lois Metcalfe, Executive Director

Keynote Speaker Deputy Prime Minister Phillip Davis

Paul Worrell

CIQS delegation from Canada to 2015 Congress Bahamas

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Fall 2015 | www.ciqs.org | CONSTRUCTION ECONOMIST | 21

3RD CIQS CONGRESS Hosted By CIQS - Ontario

TORONTO - JUNE 24 - 26, 2016 BEST PRACTICES FOR PROJECT DELIVERY – Striving for Excellence The 3rd annual CIQS Congress with a theme of Best Practices for Project Delivery will be hosted by CIQS – Ontario and will take place June 24-26, 2016 at the Old Mill Toronto, one of Toronto’s crowning jewels; a boutique hotel dating back to 1914 and nestled in the beautiful Humber Valley. From exquisite formal guest suites set in old-world English architectural design to elegant dining, this venue provides maximum comfort.

Experience a weekend full of wonderful activities. Start your experience off with a hike or bike ride through Toronto’s Bike and Walking Trail System, the entry point for which is a mere steps away! Bike ride along the Humber River all the way from the lake to the top of the city or enjoy a kayak ride through the scenic Humber River and end up right in Lake Ontario.

The Humber River meanders calmly through West Toronto and it takes approximately two hours to paddle from the Old Mill Toronto down to Lake Ontario and back again! If you are an outdoor enthusiast, you will be able to see wildlife ranging from birds such as the Blue Heron, White Egret, swans and ducks to other animals such as deer, coyote, beaver, mink, turtles and more! Finish off your afternoon of physical activity with a leisurely game of tennis.

Follow this up with some of Toronto’s premiere shopping destinations, only a short distance from the hotel. Explore the very best in shopping and more than 30 different dining establishments, including pubs, bars, coffee houses, spas and a retro-cinema! After your day in the sun is over and you return back to the hotel, you can have a traditional afternoon English tea in recognition of a century-old tradition.

Since 1914, pedestrians, cyclists, canoeists and motorists have enjoyed the customary English tea, while relaxing amidst the sounds of a waterfall inside the fully landscaped courtyard!

A portion of the proceeds from the Afternoon Tea will be donated to Women’s Habitat, a place that provides safe refuge, counselling, support and advocacy for women and their children who are fleeing domestic violence. Step into a sanctuary created to heal both the mind and body.

22 | CONSTRUCTION ECONOMIST | www.ciqs.org | Fall 2015

Wrap yourself in a plush bathrobe and enjoy the tranquility of the on-site spa as you experience a customized spa package, created just for you! Enjoy an exceptional dinner in a formallydesigned Dining Room setting and then escape to the sounds of some of Toronto’s most acclaimed jazz musicians in the Jazz Bar and Lounge! Throw in a round of golf in the morning following a banquet-style breakfast fit for a King or Queen and you have just had one of the best weekends of your life!This event is the also geared towards couples or families, offering plenty of options for everyone, so why not mark your calendars and plan a minivacation around the event, all the while supporting the Institute!

Significantly, this event will also be celebrating the 2016 official retirement of our Executive Director Mrs. Lois Metcalfe, who will have served the Institute for 38 years. Lois has been the backbone of the Institute during its formative years, so this is a fitting event at which to celebrate her immense contribution to the Institute, among the many friends and colleagues she has touched during her tenure. A preliminary itinerary of events (subject to change) is shown below.

THURSDAY, JUNE 23, 2016: 8:00am to 5:00pm: CIQS National Council Board Meeting (not open to Designation Holders).

FRIDAY, JUNE 24, 2016: 8:00am to 9:15am: Registration and Networking Breakfast ahead of the congress theme of Best Practices for Project Delivery. We explore how engineering and construction projects are facing increasing challenges to be delivered within tighter timelines and increasing budgetary constraints.

The Technical Sessions will be moderated and presented by acknowledged senior industry professionals who will share their subject matter expertise and explore best practices that can assist in project delivery. The following is the preliminary Agenda (subject to speaker confirmation) for the moderated Technical Sessions:

• 9:15am to 11:00am: Technical Sessions: • Breakout #1: Business Case & Financing This session will review the process and components for establishing a Business Case to allow a Project to be deemed viable – and the considerations, mechanisms and sources for obtaining project Financing.

• Breakout #2: Budget & Cost Control This session will review the process of establishing and updating the Budget through the evolutionary stages of a Project – and the Cost Control process during the Construction stage of a Project.

• 11:00am to 1:00pm: Networking Lunch with Keynote Speaker.

• 1:15pm to 3:00pm: Technical Sessions: • Breakout #1: Project Execution Plan & Project Case Study This session will review the key components of developing a Project Execution Plan and how this interacts with other Plans – and a Project Case Study of a successful landmark Project that required execution under challenging circumstances.

• Breakout #2: Completeness of Contract Document & Issue Management

• TECHNICAL SESSIONS • PANEL DISCUSSIONS • SUBJECT MATTER EXPERTS • SENIOR INDUSTRY PROFESSIONALS • CIQS INFORMATION MEETING • COCKTAIL RECEPTION & DINNER • GOLF & LEISURE ACTIVITIES • NETWORKING OPPORTUNITIES • SPONSORSHIP OPPORTUNITIES

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This session will review how to ensure Completeness of Contract Documents – and the various issues that occur during the life of a Project and the approaches to Issue Management.

NOTE: In addition to learning about current practices and developments, participants of the technical sessions will have the opportunity to interact in an environment aimed at exploring best practices, knowledge transfer and networking.

• 3:30pm to 4:30pm: CIQS Information Meeting • 5:00pm to 8:00pm: Cocktail Reception SATURDAY, JUNE 25, 2016: • 8:00am to 1:00pm: Clive Evans Living Golf Tournament • 8:00am to 5:00pm: Various Activities / Partners Programs (on-site biking and kayaking, tennis, shopping) • 6:00pm to 11:00pm: President’s Dinner / Lois Metcalfe’s Retirement Celebration SUNDAY, JUNE 26, 2016: 8:00am to 10:00am: Farewell Breakfast.

All Designation Holders and aspiring professionals are encouraged to attend the CIQS Congress; it will be a huge success. Stay tuned for more information, including registration, sponsorship opportunities and confirmed speakers for technical sessions.

Sign up as soon as registration opens!!! When registration information is published; do not wait to sign up! We have already received numerous enquiries, so we anticipate both Congress and Hotel reservations will be filled very quickly. If you are interested in ‘early-bird’ sponsorship opportunities for the CIQS Congress or for any other information, please send us an email at execdir@ciqs.org.

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Fall 2015 | www.ciqs.org | CONSTRUCTION ECONOMIST | 23

THE PAQS–IWATA FOUNDATION

2016

TRAVELLING SCHOLARSHIP COMPETITION The Pacific Association of Quantity Surveyors (PAQS) established the PAQS - Iwata Foundation in 2008 for the purpose of promoting the QS profession and the professional development of young quantity surveyors in the PAQS region. Therefore, the Foundation is now sponsoring an international essay competition for young members from PAQS member countries.

The competition winner will receive travel fares, three nights’ accommodation and full registration for their attendance at the next PAQS Annual Congress which will be held from May 20-24, 2016 in Christchurch, New Zealand.

Entries for the competition are now being accepted and will close on Friday, February 19, 2016. Properly completed essays should be emailed to the PAQS Secretariat at secretariat@rism.org.my.

Entries will be judged by a PAQS-Iwata Foundation panel who will announce the result by March 21, 2016. The panel’s decision is final.

The topic for the essay competition for 2016 is: “Building for the Future – A Global Dilemma” Conditions of entry: 1. Entrants must be 40 years of age or younger and be a member of their national QS/Cost Engineering institute (all grades of members are eligible).

2. The essay must have a cover sheet showing the entrant’s name, residential address, email address and the member institute/association to which they belong.

3. The length of the essay is to be between 1,000 and 1,500 words and essays must be typed in accordance with the below rules.

4. All competition entrants agree to give the PAQS copyright for their essays.

5. Any plagiarism by an entrant will result in disqualification of the entry.

24 | CONSTRUCTION ECONOMIST | www.ciqs.org | Fall 2015

6. Entrants agree that if they win the competition that they will attend the PAQS Congress (and present their paper if invited to do so by the Congress committee).

7. The award is not transferable and not convertible to cash.

8. The winner agrees to write and submit a one (1) page report on their attendance at the PAQS Congress to the PAQS Secretary within four weeks of attending the Congress – this report may be published in the PAQS Newsletter and member journals/newsletters.

9. The winning essay may also be submitted to the ICEC for entry in the K Humphreys Awards.

10. Entries must be emailed to the PAQS Secretariat at secretariat@rism.org.my by the closing date.

11. PAQS member institutes will be asked to translate essays into English where they have been submitted in another language.

Rules for essay writing and submission - entries are to be: 1. typed in a MS Word compatible program 2. with type font being Arial size 11 3. lines are to be double spaced 4. Headings are to be Arial size 16, centred and bold 5. Sub headings are to be Arial size 12, left indented and bold 6. Footnotes and referencing is to be in accordance with the Harvard system eg: Smith, T. and Tang, H. (2006). The rise of globalisation in the QS profession. Australasian Journal of Quantity Surveying Vol 4 Issue 2, pp 34-36.

Note: The PAQS - Iwata Foundation has been named in honour of Mr Toshiyuki Iwata (1914 – 2014) who although in his eighties, attended the PAQS Annual Congresses in the very early days of the association. He attended a few congresses well into his nineties. During the 13th PAQS Kuala Lumpur congress in 2009, he gave a televised congratulatory message to the 2009 PAQS-Iwata Foundation essay winner.

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Fall 2015 | www.ciqs.org | CONSTRUCTION ECONOMIST | 25

Designing an Effective Insurance Program for Construction Projects AN OVERVIEW OF CONSIDERATIONS & APPROACHES Every construction project, regardless of its size, requires that adequate time be spent prior to and during construction, to identify, constantly evaluate, re-assess and treat evolving project risks. Not all projects are alike. Even if similar in nature, each project will face various challenges during its course. The basic formula for a successful project relies on the project being built on-time, on budget and delivered in accordance with the contract documents. Prior to determining how best to treat each challenge, a preliminary risk evaluation and risk assessment survey should be conducted to identify such risk exposures.

Some of the key questions and considerations are: • Type of Project - Depending on the type of project contemplated, the risk parameters will differ: from a new build, to a renovation project, or an addition to a main facility. Means and methods of construction must be considered: e.g., will blasting/explosives be used; will there be any shoring activities; and how will the project’s activities impact neighboring sites?

• Site Conditions - Is this a brand new parcel of land (green-field site), or has this property been occupied by others (brown-field site)? Has there been a thorough review of the Environmental Assessment reports, especially if there have been potential site contaminants which may not have been previously treated?

• Adjacent Properties – What other operations are occurring around the site which could prove to be a nuisance or disturbance? For the project location itself, is it located in an urban or rural area? What are the pedestrian and vehicular traffic constraints in and around the site? How congested is the location and how difficult is it to accommodate for movement of contractors’ equipment? Where are the laydown areas and trailer lots to be situated?

• Site Security – Does the project require hoarding, fencing, as well as round-the-clock on-site security to protect against unwanted trespassers, as project sites are often considered to be an ‘attractive nuisance’ (a dangerous condition on a landowner’s property that may attract people onto the land and may involve risk or harm to their safety)? Additionally, during the course of construction there will be materials, and contractors’ equipment littered throughout the site which could potentially attract thieves and vandals.

“THE BASIC FORMULA FOR A SUCCESSFUL PROJECT RELIES ON THE PROJECT BEING BUILT ON-TIME, ON BUDGET AND DELIVERED IN ACCORDANCE WITH THE CONTRACT DOCUMENTS.”

26 | CONSTRUCTION ECONOMIST | www.ciqs.org | Fall 2015

• Project Complexity – How complicated is the design of the project? How practical is the design in real world applications?

Have projects of the similar design been successfully completed in the past? What were their challenges, if any?

• Timelines - What are the time-lines and milestone dates which need to be adhered to? Is there a particular date that project completion is required to meet in order to fulfill the project’s intended purpose? Have sufficient supply chain contingencies been accounted for as they relate to heavily designed and specified purchased components, e.g., Boilers/Turbines.

• Contractor Qualifications – What are the qualifications and experiences of the Contractor performing the works? What kind of relationships does it have with its main sub-trades?

How long has it been in the business and does it have prior experience with similar undertakings? Is it financially viable and can it be relied upon to support the appropriate deficiency work, including guarantees/warranties? How robust is their workplace health and safety record?

• Consultants/Architect & Engineers Qualifications – This will be similar to that of the Contractor’s requirements. What do their resumes, past experience and overall qualifications look like, in order to gauge, depth of knowledge and core competencies?

• Budget – How flexible is the budget, given that changes often occur during the life of the project? How much consideration has been given as an allowance for such amendments during the course of the build?

• Stakeholders – All parties to the project will have varying degrees of interest, from the Project Owner (prior to and post construction), the Contractor, Main-Tiered Sub-trades, Consultants, Suppliers, Lenders and, depending on the project, may also include Government Agencies.

• Consequential Damages – What are the financial implications should the project be delayed, taking into account that a loss of anticipated profits due to protracted completion dates could have impact upon business operations downstream?

These are just some of the items for consideration from the Owner’s perspective, prior to commencing construction work on a project. Other factors that could affect the project include: unplanned labour strikes or labour shortages; unplanned, escalating material and equipment costs; unexpected weather conditions; financial crisis; acts of war; riots; and acts of terrorism, as well as potential breaches to the company’s internal database. The list of probable events can conceivably be quite lengthy, but one has to consider and weigh the likelihood of such events occurring during the project’s life. Early planning and risk

allocation is critical to the life and success of the project and so it is imperative that a detailed analysis on such project risks and exposures be contemplated at the onset. Once these risks are identified, we can proceed with determining how best to treat, manage, control and monitor such exposures.

Many of these considerations can be transferred monetarily through the procurement of insurance. Even though insurance does not ‘plug all the gaps’, as there are deductibles/self-insured retentions, and policy exclusions, it is a far cheaper option than retaining the majority of fortuitous project risk. When it comes to procuring project insurance, there are two general methodologies: Contractor Controlled Insurance Programs (CCIP) and Owner Controlled Insurance Programs (OCIP). This discussion will illustrate the key differences of relying on a CCIP (also known as an ‘annual program’) versus an OCIP (also known as ‘project specific placement’).

First let us take a step back and examine what the Canadian standard is when it comes to engaging in a contractual relationship between Owners and Contractors. The Canadian Construction Documents Committee (CCDC), which has been in existence for over 40 years, has effectively brought forth all the relevant issues from various stakeholders, with a fair but objective view on the entire contracting process. The committee consists of contractors, owners, risk management professionals and legal counsel. Their main function is to provide documents that are well-balanced, uniform and standardized for the industry to use during the contracting phase, with the intention of providing documents that are fair to all parties involved.

In its standard form, the CCDC–41 Insurance document provides the standard insurance minimum requirements for the General Contractor (GC) as a guideline and benchmark.

Coverages within this document refer to both on-site and off-site insurance coverage which the GC should carry. This is a sensible approach as the GC typically has full control of the site, the project schedule, and the sub-trades. As such, it makes sense that the GC has control of procuring and assessing/determining the appropriate level of risk transfer that is required from project to project. Typically within the contract, there are indemnity provisions which will shift the onus and responsibility to the GC for any third party liability and/or property damage issues/activities arising from the GC’s actions while performing the contract.

Once it has been agreed that the GC will provide the insurance coverage for the project, it will be relied upon to provide the appropriate coverages, limits of insurance, deductible levels and to select appropriate carriers to insure the project. Often the GC will look to its incumbent carrier to provide a program to insure all of its on-going contracts on a ‘portfolio’ or annual basis, and thus rely on its own general insurance program to satisfy contractual requirements. It is common practice in Canada for GC’s to rely on their own practice policies, versus placing project specific placements for each and every project, mainly due to administrative and cost/efficiency reasons. When a GC is required to place project specific insurance outside its program or ‘portfolio’, this is typically dictated in the bid documents at the Project Owner’s request.

In addition to managing the procurement of the insurance in a CCIP, the GC will also be responsible for controlling and

“EVEN THOUGH INSURANCE DOES NOT ‘PLUG ALL THE GAPS’… IT IS A FAR CHEAPER OPTION THAN RETAINING THE MAJORITY OF FORTUITOUS PROJECT RISK.” managing the claims process and is obligated to notify carriers of claims that occur. The GC has a vested interest in expediting claim(s) as it still has the responsibility of ensuring the project is delivered in a timely manner. A CCIP arrangement - where the ideal party (GC) is the best positioned to manage the risk - may not always be advantageous for the Owner or other stakeholder parties (lenders); and a customized Owner Controlled Insurance Program (OCIP) may be more suitable.

Generally, the cost of insurance for each project is ultimately funded by the Owner. During the tendering phase, insurance costs are often included by the GC as a line item in its bid. There is a probability that the GC has included a profit mark-up in the bid that includes the cost of insurance in its final bid price. These insurance costs will vary from contractor to contractor, as their pricing will be based on their individual claims history or loss experience, on an aggregate basis for all of their prior and on-going works, which is subjective. Ideally, with the Owner taking on the task of the procurement, the GC and its sub-trades should be able to provide reductions in the overall bid price as it relates to insurance cost inputs, theoretically providing potential cost reductions for the Project Owner. These savings should at least offset the Owner’s

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Fall 2015 | www.ciqs.org | CONSTRUCTION ECONOMIST | 27

direct insurance costs, and additionally remove or reduce any potential markup that could be included in the bid price.

Another key advantage of using a project specific placement approach is that it will ensure that the coverage purchased will provide uniformity of cover for all parties to the project, and meets and satisfies the Owner’s and relevant stakeholders’ requirements. This consistency of cover also eliminates potential coverage gaps that could arise when contractor and subcontractors arrange their own insurance policies.

Depending on the project and its complexity, an OCIP might be the most sensible solution. The ability to negotiate policies with broader coverage, customized or manuscript wordings, and possible cost reductions could be some of the advantages when insuring projects like a factory, an oil refinery or power plant, which are heavily engineered. The Owner would then have the ability to leverage its project in the insurance market and negotiate the best pricing in the open market without being concerned about a GC’s adverse loss/claims history affecting the project premiums.

Further, in a CCIP scenario the project Owner will rely on the strength of the contractor’s and subcontractors’ carriers to rectify and pay potential losses. Thus, the Owner will have limited control over the expediency of claims settlements, carrier selection, coverage quality of policy wordings, adequacy of policy limits, and acceptability of exclusionary language that limits coverage. In terms of negotiating and settling claims, this process will be streamlined as well. The Owner will have the ability to deal directly with carriers for claims which will eliminate delays

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that could arise during the claims payments process. This allows the Owner to manage the budget accordingly, and enables the project to continue without unduly affecting project cash flows.

Lastly, if a project has several stakeholders and lenders who are required to be a part of the policy due to their financial interests, an OCIP could provide administration efficiency. Since the Owner would purchase the insurance, it would be able to collect and verify insurance coverage with minimum delay to satisfy such stakeholders. There are, however, internal challenges with implementing an OCIP program. The process requires diligence and commitment from the Owner, as administering such a program requires a certain level of dedicated administration, which includes the management of the paperwork to verify that the contractors are extracting their insurance costs from invoices, as well as promptly liaising with carriers as it relates to project extensions and premium payments. Contractors may still carry a cost for insurance in their bids, arguing that there are still risks that are not contemplated within the OCIP program, and that there are elements of exposure which would inherently still be theirs to carry throughout the life of the project and beyond. It has to be said that the OCIP approach is not necessarily warranted for a one-off build, (a strip mall for instance); it is more fitting for larger, more complex projects and where Owners, such as developers, are constantly starting new projects.

The intent of this discussion was to provide a high-level overview of the options available when purchasing insurance for a project, as well as the key elements of risk considerations. There are many other areas that have not been discussed at length, such as: specific types of coverage; performance security tools such as surety bonds; and the management of contractual risks of a project which are non-transferrable. Other factors, such as the type of construction contract used, (i.e., construction management, stipulated lump sum, etc.) will change the dynamics of which party should be responsible for carrying the project insurance. Project risks constantly evolve, so it is imperative to a project’s success that effective and diligent risk management is in place at all phases.

ABOUT THE AUTHOR Barrie Ngeh Barrie is an Assistant Vice President with the Willis North America Construction Practice.

Barrie has 13 years of experience working in the insurance industry and has worked in the commercial sector and worked on accounts of varying sizes in the retail, manufacturing, construction, renewable energy and real estate sectors. Barrie is responsible for leading a portfolio of construction accounts which included multi-national constructors, developers and property owners, including larger projects specific placements and government implemented programs, e.g., Infrastructure Ontario. Barrie is currently enrolled in a Bachelor of Business Management program at the University of Athabasca. He has completed the Canadian Accredited Insurance Broker program, Canadian Risk Management designation and Enterprise Risk Management designation.

NEW CIQS AWARD Are you an aspiring Estimating Professional/ Professional Quantity Surveyor?

New Education Policy Guidance Notes Recent Graduate, Associate, Mature Candidate or Direct Finalists are encouraged to review their current membership status to establish if it is time to progress towards Construction Estimator Certified (CEC) and Professional Quantity Surveyor (PQS) status.

The CIQS is pleased to announce the implementation of new Education Policy Guidance Notes which confirm that the requirements for becoming a CEC and PQS have been streamlined in an attempt to assist aspiring professionals to achieve these much sought after professional designations.

For more information, please visit the CIQS website www.ciqs.org. The new Education Policy Guidance Notes are located in the ‘Members Only’ section (members must log-in to gain access) under the ‘Education’ tab (drop down menu will have ‘Policy Guidance Notes’).

Graham Randall Award The CIQS Board of Directors is pleased to announce the creation of a new award in recognition of Graham Randall’s tremendous amount of work on the CIQS Test of Professional Experience. In recognition of Graham’s industry experience in contracting prior to retiring, the Board thought it appropriate to give the award to the CIQS subject # 303 - Pricing and Bidding Craig Bye, CIQS Chair, congratulating Procedures. The first award will be given Graham Randall on the creation of for the highest mark (above 75%) in this the Graham Randall Award. subject. Graham has been asked to present the first award at the 2016 CIQS Congress to be held in Toronto.

This is the third annual award CIQS administers. The Frank Helyar Memorial Award is given annually to the candidate achieving the highest mark in Subject # 302 - Measurement of Construction Works. The second award is the Buster Vermeulen Memorial Award given to the candidate with the highest mark in Subject # 308 - Cost Planning.

Winners of these awards receive $500 and a certificate of achievement.

The CIQS Award Fund operates on donations and continues to grow due to the generosity of Designation Holders and firms. For more information on the CIQS awards and to make a donation, please contact Lois Metcalfe at execdir@ciqs.org.

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Fall 2015 | www.ciqs.org | CONSTRUCTION ECONOMIST | 29

MEMBER INTERVIEW

George Evans COST PLANNING LEADER

When and where did you start your career, and what were the highlights of those formative years?

I Graduated from the Building Technology Program at the British Columbia Institute of Technology. Every group has ideas of what they think they are going to do when they graduate and our group all thought they would be project managers. At the time, my dad had just formed a new quantity surveying partnership in Vancouver, which was quite busy. Dad offered me a job whilst I tried to become the next great project manager. When I signed up to go to BCIT, I had an interest in carpentry and accounting. Once I started in a QS office, I discovered I could play with numbers all day and still get my carpentry fix, albeit on paper instead of with a hammer and saw.

My primary interest has always been cost planning and this is what I really enjoy.

When I became President in BC, I was the representative to CIQS Council where I started as Registrar and ended as President.

What is the area of your expertise; how did you develop this, and how does this assist our industry?

My primary interest has always been cost planning and this is what I really enjoy.

I like being part of the process of seeing a project from concept to completion and helping the design team to meet what always seems to be a tight budget, without overly compromising the design intent. I enjoy the design process and appreciate the skills that designers bring to the table. I think that my appreciation for the design process helps me to come up with more creative ways to meet budgets rather than just cutting scope or interesting design features.

To what extent have you been involved with the CIQS, and how would you describe this experience? Also, what is your advice to aspiring quantity surveyors and estimators as they progress their careers?

QS Online Cost Consultants Inc. Halifax, Nova Scotia p. 902 405-1504 | c. 902 488-1501 halifax@qsonlinecostconsultants.com www.qsonlinecostconsultants.com

30 | CONSTRUCTION ECONOMIST | www.ciqs.org | Fall 2015

I have been involved with CIQS and CIQS-BC from the start of my career.

Actually, before I became a QS, I attended CIQS-BC dinner meetings and started helping the organizers at the various events. I served on the CIQS-BC Board for five years starting as Treasurer and ending as President. I have to thank Marvin Kale PQS(F) for encouraging me to join his Board in BC. When I became President in BC, I was the representative to CIQS Council where I started as Registrar and ended as President. I continue to volunteer occasionally and I organize the annual CIQS-BC golf tournament. This year is our 29th year. My advice to aspiring professionals is to talk to as many people as you can. The internet is a great tool but talking to suppliers, builders, engineers, architects, site superintendents, etc., is the best education you can get. Join CIQS, attend everything and get involved.

What notable changes have you seen in our industry and profession over the year, how do you see our profession change in the future, and how should we position ourselves for this?

For me the biggest change was computers. They were a new thing when I started. We had them in the office but only the administrators were using them.

The volume of work we can produce now in the same amount of time is incredible.

More recently is the advent of on screen measurement systems. I know they are not new but they are newer.

Getting drawings electronically and measuring and reporting electronically has reduced the volume of paper in our office by a staggering amount. As for change in the future, I am not sure I see a lot of change. There is constant modification to what we do and how we do it but the basic principles remain the same. I am doing things differently than I was 30 years ago but the questions and solutions always seem to be similar.

What are your views on the current state of the Canadian economy and in particular construction?

The current drop in the Canadian economy is a perfect example of what happens when you put all your eggs in one basket.

We were so reliant on the price of oil we forgot about some of the other great industries out there, like manufacturing

and construction. I have seen highs and lows in the construction industry over the years but it always comes back around.

I was speaking with QS friends in Alberta the other day and, despite the doom and gloom, they are still busy.

What are your interests and do you have any claims to fame that you would like to share with our readers?

My favourite pastime away from the office is hockey. I play in a recreational league once a week with the same group of friends that I have played with for 20 years. We are a lot fatter and slower now but the beer is still cold at the end of the game. My other favourite is golf.

I got that bug from my Dad. I am very proud to have my name on a couple CIQS and CIQS-BC golf trophies, one of which is named in my Dad’s honour.

I am doing things differently than I was 30 years ago but the questions and solutions always seem to be similar.

I have seen highs and lows in the construction industry…but it always comes back around.

George Evans, PQS(F), MRICS is a graduate of the BCIT Building Technology program majoring in Economics. As a seasoned senior professional with 25+ years of experience including cost planning, contract administration, change order negotiation and construction loans monitoring, George has been with LEC since 1987 and has been a Principal of the firm since 2001.

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Fall 2015 | www.ciqs.org | CONSTRUCTION ECONOMIST | 31 Province : Ontario

Publication : Construction Economist

Épreuve # : 1

Aspiring Professionals Corner

ASPIRING PROFESSIONAL QUANTITY SURVEYOR

SEAN MOONEY Cost Consultant, BTY Group

M

y involvement in the construction industry began with a summer job when I was a teenager. I spent the majority of my 20’s traveling around North America building environmental containment systems. There was a great deal that I appreciated about that work, including the incredible opportunities it provided me to travel and see places that most other people would not normally see.

As I climbed the ranks to site supervisor I learned a great deal about how to work with people from diverse backgrounds.

Many of the men that I was in charge of were a great deal older than I was, and I had to strike a balance between respect and authority in order to ensure they were motivated to do their best work under my watch. I also learned things about myself from my time building environmental containment systems – namely my attention to detail and the effectiveness of time management, most specifically, finding the best possible way to streamline a project in an almost assembly-line manner. For example, if the project manager told me that we had five days to do something, I would inevitably find a way to do it in three.

After over a decade in the industry I felt that I was ready to take on new challenges. While the company I was working for at the time kindly offered to train me as an estimator for that specific type of construction, I knew that without an education my skills I would never be recognized beyond the company. I first

In this new line of work I was able to see the big picture – learning about jobs in detail and to see how they evolved from a concept brief to the finished product through tracking the cost of the job. went to upgrade my high school math via correspondence, certainly not an easy task after having been out of school for so long. I then had to decide on the appropriate program that meshed with my interests, abilities and aptitudes.

I finally settled on Fanshawe College’s Construction Engineering Technology Management program. This three-year Ontario College advanced diploma appealed to me for many reasons, primarily because it promised to train me to be a project manager, which at the time is what I thought I wanted.

The program turned out to be better than I expected. Over the course of three years at Fanshawe and with my co-op experience, my goals have evolved and I now intend to achieve Professional Quantity Surveyor status. I can particularly thank one of my teachers at Fanshawe, Ralph Lembcke, who was great at encouraging all of his students to harness the courses we were taking with a focus towards joining the CIQS. I was unaware of this organization when coming in to the program and am most grateful to Mr. Lembcke for suggesting this opportunity for professional development.

…if the project manager told me that we had five days to do something, I would inevitably find a way to do it in three.

32 | CONSTRUCTION ECONOMIST | www.ciqs.org | Fall 2015

Additionally, because of the co-op placements required for my diploma, I was able to participate in a side of the construction industry that I had little prior experience with: cost estimating and cost management. I was surprised to discover how much I enjoyed this work, especially the placement I had with BTY Group in the summer of 2014 as a Cost Consultant Intern. I had always been somewhat reticent about office work, which is part of the reason I went straight into the workforce after high school and had not considered college at that time. But what I discovered during my co-op placement was that the things I had enjoyed about my work in constructing environmental containment systems were present in different forms in my new work. Whilst in my past life I relished the challenge of completing a job faster and more efficiently than required, while simultaneously paying attention to the little details, in my time at BTY I discovered that I needed to approach my work in this manner. Additionally, I learned that I enjoyed aspects of this line of work that were absent from my previous career. In this new line of work I was able to see the big picture – learning about jobs in detail and to see how they evolved from a concept brief to the finished product through tracking the cost of the job. I enjoyed working on a wide variety of projects, looking at over 40 jobs

during my time at BTY. I was amazed at the diversity of commercial, industrial and residential jobs in the construction industry. I particularly enjoyed learning how consultants compile their estimates within a system and have found this knowledge to be invaluable. My education at Fanshawe linked well to this new line of work. For example, having used both CIQS publications (Elemental Cost Analysis and Method of Construction Works) in the previous semester at Fanshawe, I had a firm base of understanding of the cost estimating process.

Thanks to this great foundation there are many opportunities now in front

of me and I am excited to see what the future holds. Having just wrapped up my program at Fanshawe, I will be returning to the Toronto BTY office and embarking on the next step in my career as a Cost Consultant on the Cost Management team. I will be applying the skills I learned during my education and co-op to new responsibilities and will be working towards becoming a qualified member of the CIQS, gaining the title of Professional Quantity Surveyor. Thanks to an ideal combination of academics and real world placements, I know that my career will continue to stimulate, challenge and engage me. I thank the

CIQS and in particular the Editor of the Construction Economist, Arif Ghaffur, in encouraging me to write this article and providing the opportunity to share my experience as a contributor to the new “Aspiring Professionals” section in the Construction Economist.

“At BTY, we are delighted to have aspiring professionals such as Sean Mooney that are committed to progressing their careers and in parallel achieve the coveted professional qualifications of PQS.” – Toby Mallinder, PQS, MRICS Partner, BTY Group

ASPIRING PROFESSIONAL QUANTITY SURVEYOR

SHANE McKERNAN Project Coordinator, Concosts Group

S

hane joined the CIQS-BC board in October 2013 as a student member helping provide information and ideas on attracting a younger generation to the CIQS and quantity surveying profession.

Prior to being a student member (non-voting) on the CIQS-BC board, Shane graduated from the BCIT Construction Management program in 2013 following six years in the field as a Red Seal carpenter. Shane hopes to achieve his CEC designation this year, and will continue his education until he obtains his PQS designation. Shane aspires to become a project manager and work with projects focused on green and sustainable building

practices. Shane enjoys all manner of sports but is a particularly gifted fantasy footballer and scotch aficionado.

Over the last two years, Shane has been working as a quantity surveyor in the lower mainland, with the recent added responsibilities of a project coordinator within The Concosts Group. Shane currently sits on the organizing committee of the Pacific Association of Quantity Surveyors (PAQS) 2017 Vancouver event as the secretary and student liaison. He will be in charge of recruiting students in the industry to help volunteer at the event and introduce them to the exciting career of quantity surveying. As a recent student, Shane hopes to help spread awareness

of the quantity surveying profession to students and help continue the efforts of the CIQS-BC board in proving the benefits of this organization and profession to British Columbians.

“CIQS-BC is focused on providing student/graduate members the opportunity to input into the future direction of our profession. Shane brings along enthusiasm and ideas to assist the CIQS-BC Board as we deliver our mandate on behalf of our members in British Columbia.”

– President – Angela Lai, PQS, FRICS President, CIQS-BC, CIQS Board Member

Construction Economist welcomes your input Are you a student, recent graduate, associate, mature candidate or direct finalist working towards your CEC or PQS status?

Please email (execdir@ciqs.org) if you would like us to consider any articles that you would like to propose for publication in the ‘Aspiring Professionals’ corner of the Construction Economist.

Fall 2015 | www.ciqs.org | CONSTRUCTION ECONOMIST | 33

Congratulations to the following Designation Holders who have qualified as a PQS or CEC (including reinstatements): CIQS – British Columbia

CIQS – Maritimes

Jordan Almond, CEC Mahdi Askarzadeh, PQS Gerhard Botha, PQS Christopher Chin, PQS Howie Chuang, PQS Keith Damphousse, PQS Ian Drouet, PQS Aidan Kelly, CEC Keith Leung, CEC Mark MacDonald, CEC Justin Norton, PQS David Parks, CEC Ryan Povey, PQS John Speakman, CEC Etienne Theron, PQS Cody Voorhorst, PQS

Richard Edwards, CEC Keith Hare, CEC

CIQS – Members at Large Farhan Aftab, PQS Samuel O. Ayodele, PQS Rima Samih Barzak, PQS Ashraf Hammadi, CEC Afzal Mehdi, PQS Aniqua Strachan, PQS Melissa Yong, PQS

CIQS – Ontario Magdy Abdelmalek, PQS Zulifqar Ali, PQS Deepesh Bissoonauth, PQS Iain Chambers, CEC

Vincent Chung, PQS Peter Clare, PQS Elvan Eryoner, PQS Jonathan Gilford, PQS Bipin Gina, CEC Prasanya Gnanathurai, CEC Andrew Gordon, PQS Mukesh Kumar, PQS Annie Liu, CEC Amir Lopci, PQS Jeffrey Malo, CEC Alejandro Mejia, CEC Mark Pellerin, PQS Usman Saeed, CEC Patrick Stepniewski, PQS Richard Worr, PQS Miaosen Zhou, CEC

CIQS – Prairies and NWT Ghassan Adwan, CEC Maynard Basilides, CEC Peter S. Bhullar, CEC Jatin Jajal, PQS Alex Marsh, PQS Sami Moufti, CEC Noel Naughton, PQS Cameron Pole, PQS Ben Postma, PQS Jose Surtida, CEC Elier Villarreal, CEC

CIQS – Quebec Thérèse Normandeau, CEC Evans Parent, CEC Guy Poisson, CEC

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