Issuu

JUNE 2015

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TOP Contractors Your guide to Canada’s construction giants

UNDERGROUND CONSTRUCTION KEEPING ON TOP

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VOLUME 59, NO 4. / JUNE 2015

COVER STORY 25 Top Contactors 2015

Our annual survey of Canadaâ€™s largest construction firms

42 Staying on Top

Execs from some of Canadaâ€™s oldest construction contractors explain how their firms have stayed successful over the decades.

DEPARTMENTS 7 Comment

The other side of the mirror: owner perspectives on construction

10 News Industry news

22 Construction Stats

The latest news on construction activity and construction employment

COLUMNS 60 Software

Connecting the cloud to the field

61 Risk

Is your company optimally capitalized?

62 Contractors and the Law Reducing a claim: three ways to set-off

Index of Advertisers

features 50

Hard-core technology improvements in underground construction

How machine automation can make your operators more efficient and your equipment more productive

Keeping on Top of Underground

Working smart

on-sitemag.com / 5

EDITORIAL

The other side of the mirror

ood business leaders always make an effort to look at things from the client’s perspective. In 2014, KPMG International published Climbing the Curve: 2015 Global Construction Project Owner’s Survey. They surveyed more than a hundred executives involved in private and public construction internationally, ranging widely in revenue and sector. More than a quarter worked for government agencies. It is an interesting glimpse of the business from the other side of the mirror. How many of their perceptions of the construction business would you agree are valid? Are these numbers significantly different in Canada?

Many owners say that their preparation, planning and prioritization are rigorous. • 30 per cent say they use the design/bid-build approach; 32 per cent prefer engineer-procure-construct. • 74 per cent complete a formal project delivery and contract strategy analysis, prior to approval. • 84 per cent screen projects using financial and risk analysis.

Talented staff remains in short supply. •4 4 per cent struggle to attract qualified craft labor. 45 per cent lack planners and project managers. • Organizations with fewer full-time project staff spend more on capital expenditures per employee, according to the report. • 69 per cent hire external resources equivalent to more than five per cent of the total workforce on a per project basis.

Owners are confident in their project controls.

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6 / JUNE 2015

•6 4 per cent say their management controls are either “optimized” or “monitored.” • 55 per cent are ‘satisfied’ or “mostly satisfied” with their investment in project management. • 74 per cent feel investment in controls and governance has reduced costs. • 73 per cent are comfortable with the accuracy and timeliness of project level reports.

Project-management information systems are growing in popularity. •5 0 per cent use PMIS. Of those that do not, 41 per cent plan to introduce it within two years. • 32 per cent of those using PMIS have not yet integrated it with their accounting and procurement software.

Owners report numerous project failures. •5 3 per cent suffered one or more underperforming projects in the previous year. That includes 71 per cent of energy and natural resources respondents and 90 per cent of those from the public sector. • In the past three years, just 31 per cent of all respondents’ projects came within 10 per cent of budget and 25 per cent came within 10 per cent of their original deadlines.

Contingency planning has been mixed. •3 0 per cent of respondents use quantitative risk analysis to calculate contingencies. • 49 per cent use both a project-level contingency and a management reserve. • 30 per cent draw down from a single pool of contingency based on project risks.

Contractor collaboration seems to be becoming more important. •8 2 per cent of respondents expect greater owner/ contractor collaboration over the next five years. • Just 32 per cent have a high level of trust in their contractors. • 69 per cent say poor contractor performance is the single biggest reason for project underperformance.

Contracts emphasize the divide between contractors and owners. •5 8 per cent are fixed-price contracts. • 72 per cent hold full competitive tenders when awarding contracts. • 48 per cent expect to have more negotiating strength with contractors. Most of this comes directly from the KPMG report, which makes for a compelling read. It is discouraging that only 32 per cent of clients have a high level of trust in their contractors; or that 69 per cent perceive that contractor performance is the root cause of project underperformance; or that 82 per cent want more collaboration with their contractors. It re-emphasizes what you need to do to stand out from the pack.

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CONTRIBUTORS

www.on-sitemag.com / Fax: 416-510-5140

PUBLISHER | Peter Leonard (416) 510-6847 PLeonard@on-sitemag.com EDITOR/EDITORIAL DIRECTOR | Corinne Lynds (416) 510-6821 CLynds@on-sitemag.com (on mat-leave)

MEET OUR CONTRIBUTORS FOR THIS ISSUE

CONTRIBUTING EDITOR | James A. Barnes ART DIRECTOR | Mark Ryan (416) 442-5600 x3541 MRyan@annexnewcom.ca

JIM BARNES / Contributing Editor, On-Site

ASSOCIATE PUBLISHER | David Skene (416) 510-6884 DSkene@on-sitemag.com

On Staying on Top: A surprising number of the companies that were on the Top Contractors list 25 years ago still dominate it. We ask the execs how they stay on top.

SALES & MARKETING COORDINATOR | Kim Rossiter (416) 510-6794 KRossiter@annexbizmedia.com

DAVID BOWCOTT / Senior vice-president, national director large/strategic accounts, construction and infrastructure services, Aon On Optimal Capitalization: “ In today’s global economy, you need to be aware of all forms of performance security that owners (and their lenders) are willing to accept.”

DAVID GODKIN / Contributing freelance writer & contributing editor On Keeping on Top of Underground: We asked three equipment manufacturers and one service provider to explain what makes the new underground technology a must-have.

LAUREN E. KRISTJANSON, LAWYER, AND JACK FINN /articling student, Borden Ladner Gervais LLP On Reducing a Claim: Three Ways to Set-Off: “ It is important to remember the differences between the three types and to recognize which type of set-off applies to your counterclaim.”

JACOB STOLLER / Principal, StollerStrategies On Connecting the Cloud to the Field: “The cloud is not a killer application, but an alternative delivery mechanism for IT that provides the same functionality available – at least in theory – from conventional servers.”

8 / JUNE 2015

PRODUCTION MANAGER | Steve Hofmann 416-510-6757 SHofmann@annexnewcom.ca CIRCULATION MANAGER | Selina Rahaman (416) 442-5600 x3528 SRahaman@annexnewcom.ca Published by Annex Business Media 80 Valleybrook Drive, North York, ON M3B 2S9 Vice President Annex Business Media East | Tim Dimopoulos (416) 510-5100 tdimopoulos@annexbizmedia.com President & CEO Mike Fredericks mfredericks@annexweb.com

SUBSCRIPTION RATES Canada $81.00 per year, Outside Canada US$139.00 per year, Single Copy Canada $13.00. On-Site is published 7 times per year except for occasional combined, expanded or premium issues, which count as two subscription issues. PRIVACY NOTICE From time to time we make our subscription list available to select companies and organizations whose product or service may interest you. If you do not wish your contact information to be made available, please contact us via one of the following methods: Phone: 1-800-668-2374 Fax: 416-442-2191 E-mail: jhunter@businessinformationgroup.ca Mail to: Privacy Officer, 80 Valleybrook Drive, North York, ON M3B 2S9 Canadian Publications Mail Agreement No. 40070230 On-Site receives unsolicited materials (including letters to the editor, press releases, promotional items and images) from time to time. On-Site, its affiliates and assignees may use, reproduce, publish, re-publish, distribute, store and archive such unsolicited submissions in whole or in part in any form or medium whatsoever, without compensation of any sort. DISCLAIMER This publication is for informational purposes only. The content and “expert” advice presented are not intended as a substitute for informed professional engineering advice. You should not act on information contained in this publication without seeking specific advice from qualified engineering professionals. Canadian publications Mail Sales Product Agreement 40069240 Established in 1957, On-Site is published by Annex Business Media Inc. ISSN: 1910-118X We acknowledge the financial support of the Government of Canada through the Canada Periodical Fund of the Department of Canadian Heritage.

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INDUSTRY NEWS

Roadshow attracted 75 to review advanced construction technology.

INDUSTRY>NEWS ORBA eyes advanced roadbuilding tech The Ontario Civil Technology Roadshow attracted some 75 industry professionals to Bolton, Ont. for a one-day event in April. Both educational sessions and handson training were showcased at the Ritchie Bros. Auctioneers facility. Topcon, GeoShack and John Deere/Nortrax put construction, survey, civil engineering, architecture and design technologies under the spotlight. This inaugural event was judged a success by all participants, said Richard Stamper, manager, Member Services, Ontario Road Builders’ Association. “We’re interested in sitting down with that group (of sponsors) and talking about

how we can expand it for next year,” he says. “We have some interesting ideas on how to do that.” “Technology in the transportation infra-

Competition Bureau greenlights cement deal The Competition Bureau has given the green light to Holcim Ltd. to sell off its Canadian holdings as part of the firm’s merger with Lafarge S.A. Under the agreement, Holcim will also sell one cement plant and five cement terminals in the U.S. The agreement requires Holcim to sell the assets to a single purchaser or in two packages to two purchasers: •T he first package includes cement terminals in Lethbridge and Edmonton, Alta., along with a cement plant in Three Forks, Mont. • The second package includes plants located in Joliette, Que. and Mississauga, Ont., as well as cement terminals, ready-mix plants and other aggregates and construction facilities. It also includes five cement terminals in the northeastern U.S. As the parties decided upfront to sell all of

10 / JUNE 2015

structure industry changes very quickly and we are excited to bring these technologies to our customers,” said Scott Zeilstra, regional sales manager for Ritchie Bros. Ontario.

Holcim’s Canadian operations to address competition concerns in Canada, the Bureau’s review focused on determining whether assets located outside of the country were important to the effectiveness of Holcim’s Canadian business. In this transaction, the Bureau coordinated with the U.S. Federal Trade Commission and the European Commission to align its merger review process. “This merger review demonstrates how the Bureau and its international counterparts can work together to ensure an effective remedy in each jurisdiction and strengthen competition law enforcement partnerships,” says John Pecman, Commissioner of Competition. This agreement addresses the likely substantial lessening or prevention of competition that could otherwise arise in Canada from the merger of Holcim and Lafarge. Holcim has included in the agreement five cement terminals located in the U.S., which it believes will enhance the attractiveness of the package. Holcim currently employs about 2,600 people In Canada and manufactures cement, aggregates and ready-mix concrete and provides construction services.

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INDUSTRY NEWS

Saskatchewan Cat dealer sold After a remarkable 70 years in business in Saskatchewan, the Kramer family has decided to retire from the equipment dealership business. Finning International Inc., a Canadian company and Caterpillar’s largest heavy equipment dealership globally, has reached an agreement to purchase the operating assets of the Cat dealership of Kramer Ltd. for approximately $230 million. “Expanding Finning’s Western Canadian operations into Saskatchewan is a great strategic fit and represents a compelling growth opportunity for our company, employees, customers and shareholders,” said Scott Thomson, president and CEO, Finning International. “We have great respect for the Kramer family legacy and everything they have achieved,” says Thomson. “We will build on their strong heritage by growing the business, providing our customers with a terrific experience, and contributing to communities in Saskatchewan.” In 2014,Kramer Ltd. generated approximately $275 million in revenue. Finning will become the approved Cat dealer in Saskatchewan in July of this year. The two companies already share customers who operate across these adjacent territories and will benefit from the continuity and support of a single dealer, according to Finning. Kramer’s employee base of 475 workers will join the Finning team. “They have a deep understanding of the local market and well-established customer relationships throughout the province at parts, sales and service locations in Estevan, Kindersley, Battleford, Regina, Saskatoon, Swift Current and Tisdale, in addition to Cat Rental Stores in Regina and Saskatoon,” says Thomson. Tony de Sousa will lead Finning Saskatchewan. He will be based in the Saskatchewan headquarters, which will remain in Regina. De Sousa has been with Finning for 39 years and has extensive senior leadership experience in sales, service and operations.

12 / JUNE 2015

Inspectors blitz Ontario sites The Ontario Ministry of Labour has announced the areas its inspectors will be focusing on during routine visits to construction sites across the province. The ministry routinely releases its schedule of enforcement blitzes well in advance, to allow employers to make the necessary improvements to workplace practices and to get their workers trained as may be required in order to pass the scrutiny of a Ministry of Labour inspection. In May and June, the Ministry of Labour construction inspectors will visit workplaces where vehicles, mobile construction equipment and pedestrian workers may be present. It will target projects where there is hazard of being struck by moving construction equipment or vehicles, or material that moves in an unexpected or uncontrolled manner.

Inspectors will focus on: •p roject planning and organization to avoid or reduce the reverse operation of vehicles • supervision • proper movement of material and equipment • trained signal persons and equipment operators

•h igh-visibility clothing • dump trucks equipped with automatic audible alarm when operated in reverse. In July and August, inspectors will visit workplaces where trenching activity is being performed and in October and November, they will visit workplaces where heavy equipment is being used. In May to August, Ministry of Labour industrial inspectors will visit workplaces where new and young workers may be present. They will check for compliance with the Occupational Health and Safety Act and its regulations. The Ministry has indicated that it will not be targeting construction with this blitz.

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INDUSTRY NEWS

OAG questions contractor procurement process In 2009, Ontario’s motorists faced less-safe winter highway conditions after the province moved to save money by contracting out winter road maintenance primarily to the lowest bidders — bidders that in many cases did not have sufficient equipment to do the work. That comment came from a 43-page Special Report, Winter Highway Maintenance, published by Ontario Auditor General Bonnie Lysyk. “Over the past five years, winter highway maintenance service levels have declined from the level that Ontarians have historically been used to,” said Lysyk. According to the document, the Ministry of Transportation was able to reduce and contain winter maintenance costs, while increasing the time it takes to clear highways during and after storms. The Ontario Road Builders Association agrees that the third-generation area-maintenance contracts have serious flaws. “For the past several years, ORBA has also raised concerns about this system,” the association said in a release. “Last winter, ORBA began to work in cooperation with the Government of Ontario toward a solution.” The report stated that in 2009/10, the busiest highways in the province were cleared to bare pavement an average of 2.1 hours after the end of a storm. In 2013/14, this increased to an average of 4.7 hours. Further, six of 20 contract areas did not meet the province’s standard of clearing the most traveled highways within eight hours, 90 per cent of the time. In 2009, the province moved to “performance-based” contracts. These contracts gave contractors full autonomy in determining how they would get the work done. The province primarily chose contractors on a low bid basis instead of selecting a contractor based on cost and ability to provide the expected level of service. Contractors under performance-based contracts used less highway treatment materials such as anti-icing liquid, sand and

14 / JUNE 2015

salt to service highways. In one contract area, anti-icing liquid use over the winter season went from an average of 3.2 million l. under the original area maintenance contract to 9,500 l. in the first year of the performance-based contract. Daily patrolling to determine road conditions was no longer required from contractors. Instead, they were only to “be aware” of road and weather conditions. As a result, equip-

ment was not deployed soon enough before and during storms and highway condition information on the Ministry’s Ontario 511 website was not updated on a timely basis. The report noted that the Ministry began to restore service levels in 2012. Subsequently, the Ministry funded contractors to add more equipment and use more anti-icing liquid, sand and salt to service highways, reducing ministry savings.

Pan Am Aquatics Centre.

OGCA lauds building excellence The OGCA’s Ontario Builder Awards, presented at the Construction Symposium in April at the Blue Mountain resort in Collingwood, Ont., showcased members’ recent and best projects. One winner was selected for each of six categories that were based on construction volume. The winners in the buildings categories were: • Bradanick Construction Services Inc., Shibogama Inn, Days Inn, Sioux Lookout • Bronnenco Construction Ltd., Earls Court Village • Percon Construction Inc., Georgian Village Seniors’ Campus • Buttcon Limited, Maple Leaf Gardens Remodernization • Eastern Construction Co. Ltd. University of Toronto, Mississauga Campus, Deerfield Hall • PCL Constructors Canada Inc., Toronto Pan Am Aquatics Centre

In the industrial categories, the winners were: • Remo General Contracting Ltd., Streetsville Main Street Square Redevelopment • Alberici Constructors, Ltd., Ferguson Avenue Water Booster Pumping Station Upgrades • Buttcon Ltd. GO Transit East Region Bus Storage and Maintenance Facility • Kenaidan Contracting Ltd., Weston Tunnel – Phase 3 Grade Separation • Maple Reinders Constructors Ltd., Hitachi Truck Manufacturing Plant Expansion. This year, the OGCA decided to choose an overall winner as well. That award went to PCL’s Pan Am Aquatics Centre. With a construction value of $160 million, the 312,000 sq.-ft. facility is the largest new-build sports facility for the Pan Am Games and is considered the largest investment in Canadian amateur sport history.

INDUSTRY NEWS

Valente to lead CCA The Canadian Construction Association (CCA) has named Anibal Valente as chair of the 2015 board of directors. Valente takes over the position from Serge Massicotte, president of Massicotte Construction, Ottawa. Valente is vice president of PCL Constructors Inc., a group of independent construction companies operating in the civil infrastructure, heavy industrial, and buildings markets across Canada, the United States, the Caribbean and in Australia. His 35-year career with PCL has spanned many leadership roles in British Columbia and Saskatchewan. In remarks to the annual general meeting, Valente touched on key areas that need to be addressed by CCA. These five areas are from CCA’s new strategic plan – advocacy, industry best practices, communication with members and partner associations, industry advancement and decision-making. “Each of these key areas outlines the important role our national association will play to address industry issues,” said Valente.

Valente joined the CCA board in 2006 and the executive in 2010. He has served as a board member of the Regina Construction Association, as well as chaired the

Saskatchewan Construction Association, BC Construction Association, Vancouver Regional Construction Association and the BCIT Foundation Advisory Board.

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INDUSTRY NEWS

Trade contractors demand prompt payment Trade contractors across Canada are turning up the heat to lobby for national legislation requiring prompt payment. During the National Trade Contractors Coalition of Canada (NTCCC) Prompt Payment Summit in April in Ottawa, members highlighted the progress made at the provincial level and discussed the next steps for seeing these initiatives through. The summit also focused on strategies to engage other concerned stakeholders who operate regionally and at the federal level. “The lion’s share of construction in Canada is done by trade contractors and the money is supposed to trickle down from the top,” said John Blair, NTCCC director and executive director of the Canadian Masonry Contractors Association. “Trade contractors have a high dependence on cash flow and right now the money isn’t trickling down to pay people who’ve completed work, even when there is no dispute about the work that’s been done.” NTCCC say trade contractors perform

New Building Code introduced in British Columbia British Columbia’s new Building Act will establish more-consistent building requirements throughout the province. The construction sector has been asking for a more standardized approach for years, as differing building requirements between jurisdictions can slow development and add costs, notes Rich Coleman, British Columbia Minister of Natural Gas Development and Responsible for Housing. With a more streamlined and modern building regulatory system, the Act will reduce costs and improve

16 / JUNE 2015

more than 80 per cent of all construction work in Canada. Trade contractors routinely receive late payments from general contractors, NTCCC says, which has resulted in cash flow problems that discourage hiring, investments in capital, and in some cases even cause bankruptcy. The adoption of prompt payment legislation would stimulate the construction sector at no direct cost to government, while bringing Canada in line with all other comparable jurisdictions, according to NTCCC. “Governments should be aware that the lack of prompt payment legislation in Canada is a barrier to prosperity, and we’re proposing a painless fix,” said Richard McKeagan, president of the Mechanical Contractors Association of Canada. In the U.S., 49 of 50 states have adopted prompt payment legislation. Globally, the United Kingdom, Ireland, Australia, and New Zealand have also enacted these laws. The European Union has adopted a prompt payment directive which all of its member states are required to translate into domestic law. Canada is an exception.

efficiency, productivity and innovation in the construction sector, he adds. The Building Act will streamline building requirements, establish mandatory standard qualifications for local building officials and expand provincial review. A two-to-four-year transition period will give local governments and building officials time to adapt to the new provisions. “The Building Act balances the consistency the construction sector desires with the flexibility local governments’ need and paves the way for greater innovation,” says Anne McMullin, presi-

Lube learning Kitchener, Mississauga, Timmins and Thunder Bay will all be sites for lube learning as FLO Components Ltd. launches the sixth year of its one-day “Lube Basics” seminars. According to the automatic greasing systems specialist, classroom time will combine with handson training to help attendees avoid common lubrication problems. More information can be found at www.flocomponents.com.

dent and CEO of Urban Development Institute. “Streamlining building requirements will also help reduce construction costs and improve housing affordability.” “We are pleased to see the B.C. government adopt a more modern approach to building regulations,” adds Manjit Sohi, president of the Building Officials’ Association of BC. “Building requirements across B.C. are currently far from consistent and often complicate construction and increase costs. This new act will give builders and developers the certainty they need to move forward with projects.”

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INDUSTRY NEWS

Ontario Infrastructure updated The government of Ontario has published an update on the more than $130 billion committed to infrastructure over the next ten years. The 2015 Infrastructure Ontario Market Update offers details on the $11.9 billion expenditure planned for 2015-16, which included a mix of social and civil infrastructure projects using Alternative Financing and Procurement, direct delivery and new real estate capital repair initiatives. The AFP project pipeline includes projects with a total capital value estimated at $7.55 billion. Ontario ministries and IO will use a new $100-million threshold to assess projects not yet assigned for AFP delivery. The government will maintain the flexiblity to assess complex projects under $100 million, on a case-by-case basis. IO will put out an estimated $70 million in new capital repair projects this year as part of the estimated $250 million worth of projects managed each year. The Ontario Government, through the Ministry of Economic Development, Employment and Infrastructure, holds Canada’s second largest real estate portfolio. IO, in cooperation with MEDEI and Ontario’s representative in Washington, DC, will continue to assist companies to target new markets, particularly in the U.S. For more information and the complete list of projects, see http://www.infrastructureontario.ca/

CCA goes lean Lean construction promises to improve value and reduce waste throughout the construction process. The Canadian Construction Association, Ottawa, has established the Lean Construction Institute – Canada to further progress with this methodology. “The LCI-Canada’s mission complements and supports CCA’s strategic plan of advocacy, industry best practices, communication with members and partner associa-

18 / JUNE 2015

2015 IO Market Update details $11.9B in spending.

George Brown secures research funding George Brown College will receive two grants from the Natural Sciences and Engineering Research Council’s College and Community Innovation Program (NSERC-CIIP) and one from the Canada Foundation for Innovation’s CollegeIndustry Innovation fund (CFI-CIIF). These grants include: • a joint NSERCCCIP Innovation Enhancement/CFI-CIIF grant in Building Information Modeling of $3.3 million over five years; and • an NSERC-CCIP Industrial Research Chairs for Colleges Grant in Smart Connected Buildings Intelligent

tion, industry advancement and decisionmaking,” noted Anibal Valente, CCA chair. The creation of this special committee of CCA follows the establishment of a U.S. group with similar objectives that dates back to 1997. “The Lean Construction Institute – US appreciates this Canadian interest and willingness to help lead the evolution and practice of lean in Canada and is looking forward to supporting LCI-Canada as a newly formed special committee of CCA,” said Dan

Building Automation Systems of $1 million over five years. More than $40 million in grants is being awarded to colleges across Canada to support applied research and development activities by industry. The announcements were made by Ed Holder, Minister of State (Science and Technology) and David Sweet, Member of Parliament for Ancaster-Dundas-Flamborough-Westdale. “The aim of our applied research is to create a bridge between Canadian companies and their ability to innovate, a particularly vital need within the Canadian construction sector,” said Anne Sado, president of George Brown College.

Heinemeier, LCI–US executive director. LCI-Canada will focus on the development and application of lean tools and techniques throughout the building-industry supply chain. All members of the industry – owners, designers, contractors, trades and allied services will be part of the discussion. “Deep application of lean principles throughout the industry, including the definition of needs, design, construction and operation of capital facilities, will continuously improve industry value,” said the CCA.

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INDUSTRY NEWS Staff Report

Feds win plaudits for infrastructure plans With election looming, construction enters the spotlight

he federal budget, tabled late in April, promises serious spending on infrastructure and has been supported by many industry groups — among them, the Canadian Construction Association (CCA), the Cement Association of Canada (CAC), the Canadian Council for Public-Private Partnerships (CCPPP) and the Progressive Contractors Association of Canada (PCA). Funding has been increased for infrastructure projects. Since it was a political priority to balance the budget this time around, the government is selling its stake in General Motors and reducing the federal contingency fund from $3 billion to $1 billion. One highlight is a new Public Transit Fund, aimed at facilitating transit projects in cities by providing them with more flexibility and predictability. “This new fund will complement the government’s existing infrastructure support by providing significant, long-term support for public transit projects that can improve the mobility of goods and people and provide broad economic and social benefits to Canadian cities,” said Finance Minister Joe OIiver. “This new permanent funding source will provide municipalities with the funding certainty they need to proceed with longterm public transit planning,” noted CCA president Michael Atkinson. The fund includes $750 million over two years, followed by $1 billion a year afterwards, to help finance public-private partnerships to pay for projects and upgrades. However, a federal election will take place before the fund starts up in 2017-18. “… We are pleased with the creation of a new Public Transit Fund that will provide a source of permanent funding for major

20 / JUNE 2015

transit projects starting in 2017 and will harness private sector expertise, including P3s,” said Mark Romoff, president and CEO of CCPPP. The federal government made a renewed commitment to provide $5.35 billion per year on average for provincial, territorial and municipal infrastructure under the New Building Canada Plan. “It is clear to our members that the new Building Canada Plan has played a key role in assisting Canadian manufacturers recover from the recession and has allowed the construction of critical infrastructure in Canada,” said CAC president and CEO Michael McSweeney. “It is equally clear to us that measures that improve Canadian competitiveness and promote private sector growth to lead us through this fragile recovery period are more imperative than ever. The creation of the Public Transit Fund is one such measure.” The budget also targeted skills. Harmonizing apprenticeship training and certification requirements in targeted Red Seal trades was one such initiative. Another was a $1 million, five-year commitment to the Blue Seal Certification program across Canada. PCA welcomed the continued commitment to skilled trades. “Today’s budget strikes an appropriate balance between fiscal responsibility and continued investment in the skilled trades, resources industry, manufacturing and other sectors at the heart of Canada’s economy,” said Paul de Jong, PCA president. “The federal government clearly recognizes that investments to improve labour mobility and better align skills training with employer needs are important ingredients for a strong economy.” The budget introduced the Canada 150 program, which will support the de-

velopment, reconstruction and expansion of cultural and shared heritage projects across Canada. This program has drawn concern from some jurisdictions due to the tight deadline and restrictions associated with it. For example, Ontario had no advance notice of the fund before it was announced, according to Brad Duguid, Ontario’s Minister of Economic Development, Employment and Infrastructure. “It’s going to be difficult for us to put something together in a couple of weeks that has any credibility to it.” He added that requirements that the money not go to already planned projects means that municipalities must submit projects that are not on their priority lists. The Federation of Canadian Municipalities (FCM) also applauded the spending. “The transit investment in this budget is good news for Canadians,” said Brad Woodside, president. “This level of permanent, ongoing funding has the potential to be transformative for public transit across this country.” However, the association noted that the government needs to ensure flexibility around the role of private sector involvement and commit the federal government to an equal, one-third investment. The group also supported ongoing annual investments of $1.7 billion for social housing, but pointed out that this is only a four-year commitment. New federal wastewater regulations that will cost upwards of $18 billion over the next 25 years were also singled out by FCM. Municipalities were looking for a federal partnership in this budget to help meet these costs. FCM said that it will continue to advocate for federal investment in a clean water fund, to be matched by municipalities and provinces.

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CONSTRUCTION STATS A selection of data reflecting trends in the Canadian construction industry

Construction employment up 14.9 per cent in year Employment increased by 59,000 in May, driven by gains in the number of private-sector employees. Provincially, employment increased in Ontario, British Columbia and Nova Scotia, declined in Newfoundland and Labrador, Manitoba and New Brunswick, and was not much changed in Alberta or Quebec. Construction employment declined by 4.7 per cent, from 1.3682M in April 2015 to 1.3635M in May. However, the May numbers represented a 14.9 per cent increase over May 2014.

Building intentions trend up Some $7.8 billion worth of building permits were issued in April in Canada, an 11.6 per cent increase over the previous month and the second monthly advance in a row. The gain in April stemmed from higher construction intentions in both the residential and non-residential sectors in Ontario. The value of non-residential permits rose 30.2 per cent to $3.3 billion, following a 24.8 per cent gain in March. Residential construction intentions grew 1.2 per cent to $4.5 billion, a third consecutive monthly advance. Institutional structures and residential buildings drove the gains in Ontario. British Columbia posted a widespread decline.

9.5

18,200

Employment

Thousands

18,000 17,800 17,600 17,400 17,200 17,000 16,800 16,600

May

Total value of permits (billions of dollars)

2010

2011

2012

Seasonally adjusted

8.5

2013

2014

May 2015

Trend

Source(s): Statistics Canada

Housing starts bump higher

8.0 7.5 7.0 6.5 6.0 5.5 5.0

Apr

2010

2011

2012

Seasonally adjusted

2013

2014

Apr 2015

Trend

Source(s): Statistics Canada

Non-res prices register uptick The composite price index for non-residential construction rose 0.3 per cent in Q1 of this year compared with the previous quarter, according to Statistics Canada. The increase was primarily due to growth in material prices. Of the seven census metropolitan areas surveyed, Vancouver posted a gain of 0.9 per cent, followed by Toronto at 0.7 per cent. Edmonton (-0.6 per cent) and Calgary (-0.2 per cent) recorded the only decreases. According to the statistical agency, the composite price index for non-residential construction rose 1.2 per cent year-over-year, with the largest gain, 2.1 per cent, occurring in Toronto.

The trend measure of housing starts in Canada was 181,231 units in May, compared to 179,524 in April, according to Canada Mortgage and Housing Corp., Ottawa. The trend is a six-month moving average of the monthly seasonally adjusted annual rates of housing starts. The bump was driven by higher multiple starts in Ontario, the Atlantic region and Quebec. “CMHC expects builders will continue to focus on managing inventory of completed but unsold units — inventory that is still above historical average,” said Bob Dugan, CMHC’s chief economist. The organization expects a slight moderation for 2015 and 2016. 240

Housing Starts in Canada - All Areas (Thousands)

215

190

165

140

May

2013 Housing Starts, SAAR

Source(s): CMHC

22 / JUNE 2015

2014

May 2015

Housing Starts Trend Line (6-month moving average)

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Top Contractors

StayIng ON

TOP Steady evolution among Canadaâ€™s Top Contractors

BY JIM BARNES t is interesting to compare the Top Contractors list of 25 years ago with the one in this issue. There have been changes, but a surprising number of the companies that were on the list then still dominate it. It is not as if the industry has not changed â€“ the companies that have survived and thrived at the top have had to adapt to very challenging circumstances. Consider: the changes over the years in corporate structure; geographic and sectoral diversification; skilled labour needs; alternative procurement models; equipment and information technology; regulation in health, safety and the environment; programs like LEED and BIM; the prevalence of partnerships; new requirements in finance and surety; and many others. However, the important things have not changed. This industry is still run by hard-working, entrepreneurial, practical thinkers. That is what keeps it healthy and profitable in good times and bad. We approached representatives of a few of our long-term Top Contractors for comments on how their firms have weathered the changes over the years.

on-sitemag.com / 25

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TOP Contractors DRAMATIC CHANGE

or a general comment, we started out with Michael Atkinson, president of the Canadian Construction Association in Ottawa. “The firms back then (30 years ago) were the master builders; they did everything. Today, that approach is Michael Atkinson almost extinct,” he says. Growing project size, especially in resource and infrastructure, is partly driving the change. He says that 15 or 20 years ago, he could have counted the billion-dollar projects on the fingers of one hand, “without using all five digits.” Today, one listing of Canada’s largest infrastructure projects shows 52 listed at $1 billion or more, says Atkinson. One reason for this growth is capacity issues among owners. “Our clients are facing the same capacity challenges in terms of the aging demographic and holding onto experienced people that contractors and the supply chain do,” notes Atkinson. They do not have the experienced people or the big engineering departments they used to. “At the same time, they have more demand, because a lot of Canada’s public infrastructure is in need of [rehabilitation]… That’s one of the reasons why we are seeing projects go out in larger scope than they might have in the past.” When the projects get bigger, the big contractors have to, as well. “If you’re not a contractor that can play in that bigger sandbox, you’re going to find yourself left behind,” says Atkinson Another factor is a growing preference for the one-stop shop. Clients no longer want to have to hire a design team, a contractor, a facility manager and the other skill sets. They want to go to one source. “A company that can’t readily supply those services may find its market disappearing,” says Atkinson. Competitive forces are increasing. “Someone said to me recently, ‘In the old days, we had to prequalify for a half billion-dollar contract. We pretty well knew that three or four of us would be shortlisted. We didn’t have to do a lot of work in the pre-qual.’” “That’s no longer the case,” notes Atkinson. “There will be two or three or four additional names there who have the capacity to do the work. You’re in a situation now where you have to do a lot of work just to prequalify, because the competition is stiffer even at the prequalification stage.” As well, he notes, “We have larger European companies in our sandbox now. That, in itself, drives a certain need to grow to compete… They have experience in P3 delivery and they have had a lot of experience with larger transportation projects.”

on-sitemag.com / 27

TOP Contractors

Rank Revenue (2014) 1 2

TO P

-$8,000,000,000 -$3,337,316,000

Company PCL Constructors Inc. EllisDon Corp.

-$2,900,200,000

Ledcor Group of Companies

-$2,810,123,672

Kiewit Canada Corp.

5 6

-$2,700,000,000 -$2,100,000,000

Aecon Group Inc. Graham Group Ltd.

-$1,624,000,000

Pomerleau Inc.

-$1,364,500,000

Bird Construction

-$1,300,000,000

Stuart Olson Inc.

-$750,000,000

Bondfield Construction Co. Ltd.

-$650,000,000

Prairie North Construction. Ltd.

-$570,000,000

Flynn Group of Companies

CAnadian Contractors

-$352,000,000

Maple Reinders Group Ltd.

-$327,000,000

Con-Drain Co. (1983) Ltd.

-$326,803,842

Pennecon Ltd.

-$301,204,000

The State Group Inc.

Based on written responses to research conducted by On-Site. Some contractors declined to participate in this research.

-$300,000,000

Taggart Group of Companies

-$286,000,000

Chandos Construction Ltd.

-$265,000,000

ITC Construction Group

-$251,000,000

Scott Builders Inc.

-$230,000,000

Dawson Wallace Construction Ltd.

-$195,064,791

Delnor Construction Ltd.

-$158,424,740

Gifflels Westpro

-$155,000,000

Govan Brown & Associates Ltd.

-$149,000,000

Walsh Canada

-$147,847,000

Avondale Construction Ltd.

-$140,000,000

Buttcon Ltd.

WITH 50 OR UNDER EMPLOYEES

-$137,000,000

Alberici Constructors, Ltd.

-$130,000,000

Marco Group

-$125,000,000

Bot Construction Group

-$120,000,000

Jacob Bros. Construction Inc.

-$120,000,000

Bluescape Construction Management Inc.

Regina, SK $20,000,000

-$112,600,000

Beedie Construction Ltd. (Beedie Development Group)

Tiki International Inc.

-$110,458,400

Grascan Construction Ltd.

-$100,000,000

Metro-Can Construction

-$88,900,000

Scott Construction Group

Oakville, ON $15,000,000

-$76,400,000

Westridge Construction Ltd.

-$73,782,244

Priestly Demolation Inc.

GEN-PRO

-$64,500,000

Lignum Interiors Inc.

Burlington, ON $14,500,000

-$52,000,000

Taurus Projects Group Inc.

TOP 5 COMPANIES 2I 3I 4I 5I

Lignum Interiors Inc. Calgary, AB $64,500,000 Hipperson Construction

Calgary, AB $20,000,000 O.N. Site Construction Inc.

28 / JUNE 2015

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TOP Contractors

AECON GROUP INC. At one time, says Adam Borgatti, director, Corporate Development & Investor Relations, Aecon Group was mainly an Ontariofocused road builder. “Now, we’re a full, turnkey, self-perform contractor countrywide, with half our business in the west Adam Borgatti and half in the east. We’re an integrated service provider across three main areas – energy, infrastructure and mining. That’s a very different company than where we started from.” “The emphasis now is on turnkey projects, executed through partnerships — not only with our bid partners but with our clients, unions, First Nations and others,” he adds. “Many of these projects are being procured through P3s, which require expertise across development, finance, construction, operations and maintenance – the full gamut,” says Borgatti. “You’re performing all those services in partnerships with global players and local organizations.” P3 bids can take over a year to complete, once you prequalify, he notes. “They cost millions of dollars to pursue. Generally, they are performed with partners that are very sophisticated and have expertise from overseas. We act as a

30 / JUNE 2015

TOP Contractors

strong local partner for some of the foreign players… It’s nice to have large, international partners with different experience that we can leverage.” “Financing issues go hand-in-hand with the size and nature of these projects. You must have a strong balance sheet and/or an ability to secure capital, bonding, insurance – there are all these packages and partnerships help. Everybody shares the risk and the costs,” says Borgatti. The company prides itself on its vertical integration. “Vertically integrated, to us, means a full suite of services. We can provide full, turnkey capabilities,” he says. “It’s a big jump and we’ve done it pretty much across all of our services.” “On the infrastructure side, for example, it could be developing a project, doing the utilities associated with that project, laying roadway or rail if it is an LRT, all the way through to project completion — doing the building on-site and even operating it afterwards if the client so wishes,” he says. The firm has had a sectoral shift. “We used to have a very large building business focused on social construction. We scaled back that business four or five years ago. We are now focused on turnkey services in the infrastructure, energy and mining sectors, which can include some buildings.” says Borgatti. “That was a real shift, for Aecon to say that we were going to self-perform the majority of services in areas where we can deliver.” The company has targeted the U.S. as a growth market. “It has the potential to be the largest P3 market in the world,” says Borgatti. “The market has some risk to it, but it is developing and we think the US demand for urban transit solutions, roadways, and other kinds of work is just going to be significant. Very few companies in the U.S. have P3 experience. It’s a very specialized skill set.”

ELLISDON EllisDon Corp. of Mississauga, Ont. has experienced tremendous growth since it started out in 1951, building schools in London, Ont., according to Jody Becker, the firm’s SVP, Emerging Markets & chief strategy officer. One constant, though, is a strong sense of entrepreneurialism that Jody Becker dates back to the firm’s founders. “We’ve always been willing to go to new places and do different types of work beyond what some people might have assumed was our core business,” she says. “That really got us into the P3 business 10 years ago, which was a real gamechanger for us.” “I believe we were the first contractor to jump into the equity box on P3 projects in Canada,” says Becker. What started out as a matter of necessity became a strength. “We have the expertise to do it and we think frankly that we can even exceed what is available from some of the financial advisors in the marketplace.

32 / JUNE 2015

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TOP Contractors

Given the size of some of the megaprojects that are now out in the market, strong partners are crucial. “They have been a key part of our expanding our abilities,” says Becker. “We’ve had the opportunity to work with some really great partners who have introduced us to some types of projects that were relatively new to us, including industrial and civil projects.” The firm puts a focus on services, according to Becker. “We call it cradle-to-grave services. That means being able to assist with the early stages of any project,” and follow through as far as the client wants. Services cover a spectrum, from equity services and design services (including Building Information Modelling and Virtual Design and Construction) to project management, managed services, facilities management and sustainability services that ensure the building meets LEED and other sustainability requirements. The firm is looking for a special kind of staff, says Becker. They need open-minded, experienced people, “who are not only well-versed in the core business but are willing to take the kind of risks that we have been talking about – people that are willing to put the extra effort in, to understand all aspects of the project, who have new ideas about how to build things and how to finance things.” EllisDon’s international orientation is increasing. “The next frontier is to build up business in the U.S.,” she says. “We are really focusing on our strategy for that market.” As well, the firm is doing projects in the Middle East, with some projects going on in the Caribbean and a project going on in Colombia.

LEDCOR GROUP Since its earliest days, Ledcor Group has set a priority on diversification, notes John Kump, chief administration officer and senior vice president, P3 Infrastructure Investment. “We consider ourselves to be one of the most diversified contractors in the country. We’re in various markets, includJohn Kump ing oil and gas, energy, commodities and building.” Alternative procurement models have spurred growth at Ledcor, as it has with other large contractors. “The projects have become so complex. What’s really driving a lot of the partnering is just how difficult it is to qualify for some of these projects,” says Kump. “The resume and the background you need to qualify – just to get through the first gate –is so stringent and so robust that few contractors can pursue those jobs on their own. They’re being forced to partner with other companies because it’s easier to qualify for those jobs together.” European contractors have become a factor in the Canadian infrastructure marketplace. “Basically, every European contractor is here now – all the Spanish, all the French, all the

34 / JUNE 2015

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TOP Contractors

British and they have capabilities in that space. It’s forcing Canadian contractors to get together to compete – either with the Europeans or with our Canadian counterparts.” “They have to partner with local companies like us. Right from the get go, as they arrived, we have partnered with several of them,” says Kump. “Over time, we’ve been watching their strategy. We haven’t seen a lot of acquisition activity,” he says. “It looks like they want to take the partnering approach with local Canadian contractors, not just buy them up and compete against the bigger ones.” P3s have also changed attitudes toward surety. “In the P3s, they require more letters of credit. It’s a different type of security for Canadian contractors, so the Canadian community has had to adjust their capital structure to be able to have the letter of credit capacity.” Kump says the situation is well understood. “It’s a matter of getting comfortable with the difference. The mechanism is different and the risks associated with that security are different.” Ledcor’s international focus has been growing, often driven by competition and multinational client requests. “That world is more complicated, contracts are more complex and there are more variables and more risks to consider. This is especially true in the U.S., where it is much more litigious,” says Kump. Kump says building the Ledcor brand is a key strategy in finding talented staff. “In the past, contractors tended to stay more in the background,” he says. “Today, contractors have to be much more forward with their brand and their top employer awards,” to attract recruits. “You have to raise your profile to attract that scarce, top talent.” “Today we are more diversified, but we’re still one hundred per cent employee owned. That’s not going to change,” he says. “Over the past ten years, the company has worked to integrate its businesses to offer turnkey solutions to our clients. Our businesses are not silos and they work together. That’s a more recent evolution.”

PCL A turning point for 109-year-old PCL came in 1977, with the introduction of employee ownership, says David Filipchuk, president and COO, Canadian and Australian operations. “We went from 25 shareholders then to more than 4,500 today. That’s a great success story.” Before that change, “We had not David Filipchuk yet branched out into the industrial business, but we were in buildings and roadbuilding,” he says. Today, “we have the three pillars of buildings, civil infrastructure and industrial,” and that diversification offers protection from market cycles. The firm’s geographic reach has expanded as well and contributed to growth. “We’ve gone beyond our strict focus

36 / JUNE 2015

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TOP Contractors

on Western Canada to being coast-to-coast in Canada and the U.S., and now into Australia as well.” P3s have been a game-changer. “We have great depth, but we use partnerships in P3s. We have adopted a best-in-class model,” explains Filipchuk. The firm partners with “the best mechanical trade, the best electrical trade and the best facility maintenance provider and form a team that works together,” while self-performed work is still valued for smaller jobs. The company maintains strong relationships in the surety and insurance world. “They are critical to our success and always have been. They are particularly important with these alternative procurement projects,” he notes. “DBFMO type operations require a strong balance sheet just to play. You have to put out security, you need formal letters of credit and often your parent company has to guarantee that they have some cash behind them. That financial strength is the price of entry,” says Filipchuk. Legal affairs have become more complex, too. “It is only in the last 10 to 12 years that we have had internal counsel. We once relied on external legal counsel, but that no longer seems possible in today’s environment, with the complexity of the agreements,” says Filipchuk. “The majority of our legal spend is on proactive legal – it’s not about disputes and litigation. It’s about knowing the contracts and managing our risk on the way in.” PCL has worked to thrive in the current regulatory environment, with special attention to health and safety regulations. “It is not acceptable for anyone to get hurt on our projects. That goal is more important than anything else we do – that’s to send our people home safely at the end of every day,” he explains. The company has made substantial investments in technologies like BIM and in LEED support. “That’s something that adds value, but it’s also a client expectation,” notes Filipchuk. Obtaining the best management tools is also an objective. In some cases, they are brought in from outside the company. In others, “we do in-house development on certain strategic pieces of software that we need to do our business. That sometimes comes with significant expense, but we find value in our own in-house apps,” he says. Jim Barnes is a contributing editor to On-Site. Contact editor@ on-sitemag.com with comments.

38 / JUNE 2015

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If Yes, please indicate which products Earth moving equipment Compact Equipment Safety Equipment Paving Equipment Dump Trucks Used Equipment Pick-Up Trucks Trailers Generators Attachments Hand Tools Compressors Lifting Equipment Power Tools Welding Tools

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TOP Contractors

EXPECTATIONS FOR

BUSINESS AREAS 2015

40 / JUNE 2015

2016

Same

Aggregates

32%

44%

24%

30%

52%

19%

Bridges

44%

36%

20%

32%

43%

25%

Commercial Buildings

45%

47%

39%

49%

12%

Communication Engineering

54%

38%

50%

14%

36%

Concrete

47%

45%

32%

59%

10%

Contract Management

46%

50%

Demolition

45%

39%

16%

44%

13%

Design/Build

40%

54%

38%

56%

Electric Power/ Utilities

48%

24%

28%

33%

46%

21%

Environmental Remediation

32%

55%

14%

23%

50%

27%

General Contracting

40%

52%

36%

55%

Industrial Buildings

49%

39%

12%

52%

37%

11%

Institutional Buildings

52%

37%

12%

55%

33%

12%

Marine-Related

55%

10%

35%

56%

13%

31%

Mining-Related

50%

26%

25%

57%

26%

17%

Oil and Gas-Related

40%

20%

40%

34%

38%

28%

Other Transportation Construction

48%

40%

12%

37%

41%

22%

Residential Houses

42%

45%

12%

41%

48%

11%

Residential: Multi-Unit

41%

17%

42%

16%

Roadbuilding

44%

38%

18%

31%

53%

16%

Sewer

45%

39%

16%

41%

45%

14%

Structural Steel

40%

44%

16%

33%

53%

13%

Waterworks

45%

41%

14%

36%

50%

14%

on-sitemag.com / 41

Top 5 under 50 Inside jobs: noteworthy projects The company has built interiors for some of Calgary’s best-known companies. 2011 • Barclays, 15,000 sq. ft. • Citi Group, 10,000 sq. ft. • Osler, Hoskin & Harcourt, 60,000 sq. ft. • Pembina Pipeline, 100,000 sq. ft. • Petrobakken, 150,000 sq. ft. • Schlumberger, 200,000 sq. ft. • Total, 100,000 sq. ft. 2012 • Blake Cassels & Graydon, 90,000 sq. ft. • Cadillac Fairview Presentation Center, 7,000 sq. ft. • Conoco Wellness Center, 15,000 sq. ft. • Devon Wellness Center, 20,000 sq. ft. • Gibson Petroleum, 80,000 sq. ft. • Goldman Sachs, 10,000 sq. ft. • Norlien Foundation, 7,000 sq. ft. • Tundra Oil & Gas, 32,000 sq. ft. 2013 • Canadian Natural Resources Ltd., 360,000 sq. ft. • Cenovus Chamber of Commerce, 30,000 sq. ft. • Conoco, 350,000 sq. ft. • Devon Canada Corp., 420,000 sq. ft. • Enbridge Project One, 80,000 sq. ft. • Korn Ferry, 10,000 sq. ft. • McCarthy Tetrault, 60,000 sq. ft. 2014 • CNRL, 40,000 sq. ft. • Pembina Pipelines, 220,0000 sq. ft. • United Communities, 10,000 sq. ft.

42 / JUNE 2015

Constructing interiors For more than thirty years, Lignum Interiors Inc. has been providing Calgarians with exceptional construction management and general contracting services STAFF REPORT Recognition as this year’s “Top Contractor with Fewer than 50 Employees” goes to Lignum Interiors Inc., Calgary Alta. The firm has an unusual niche in construction contracting: it specializes in the complete construction of commercial and corporate interiors. It does not get involved in building construction. “We concentrate on the interior projects,” says Peter Gatzsch, president. The company was founded in 1984 by Gatzsch, with his wife as co-owner. His son, Bruce, is now a senior manager with the firm and is key to the succession plan. Lignum does general contracting, but specializes in construction and project management as its primary activity. It works in partnership with the design community, emphasizes Peter Gatzsch. “We do only construction management – the actual implementation of the project.” Lignum manages all the subtrades, including carpenters, electricians and plumbers, to ensure that

Peter Gatzsch

Bruce Gatzsch

clients get the results they envisioned. Safety is a primary objective. The firm has a full-time safety officer as well as an ISN-approved safety manual. Its program has been awarded a Certificate of Recognition by the Alberta Construction Safety Association. “Our commitment to safety involves a total and organic company approach to risk management, meeting and exceeding OH&S codes to exceed industry standards,” according to the company. “We know everyone in the company personally, so we have a vested interest in returning each employee home at night safely,” says Bruce Gatzsch. Lignum defines success as a project that benefits everyone… “Not just the client and design team, but the subtrades as well,” says Bruce Gatzsch. Everyone is paid fairly and value-engineering techniques mean the client gets an on-budget project. As tradespeople themselves, Lignum works closely with the subtrades and other workers on-site, continually looking for

Rounding out the Top 5

Hipperson Construction

Tiki International Inc.

> $20,000,000 > Regina, Sask. Sectors: Building construction (non-residential) Works in: Aggregates, Bridges, Commercial buildings, Concrete, Contract management, Design/build, Electric power/utilities, General contracting, Industrial buildings, Mining-related, Other transportation construction www.hippersonconstruction.com

Top 5 under 50

O.N. Site Construction Inc.

> $15,000,000 > Oakville, Ont. Sectors: Building construction (non-residential, Construction management Works in: Commercial buildings, Contract management, Design/build, General contracting www.onsiteconstruction.ca

GEN-PRO

> $14,500,000 > Burlington, Ont. Sectors: Building construction (non-residential, Construction management Works in: Commercial buildings, Contract management, General contracting www.genpro.ca

> $20,000,000 > Calgary, Alta. Sectors: Building construction (non-residential, Construction management Works in: Aggregates, Commercial buildings, Concrete, Contract management, Demolition, Design/build, General contracting, Industrial buildings, Institutional buildings, Oil- and gas-related, Residential houses, Residential multi-unit, Roadbuilding, Other transportation www.tiki-international.com

better options. They prefer to approach the client with solutions, not questions. Growth has been steady over the past years, reflected in Lignum’s revenue. “Right now, we’re in the neighborhood of $65 million,” says Peter Gatzsch. “This year, we’ll probably do quite a bit more. It depends on the projects.” “It’s not just the revenue; the revenue is not necessarily the picture,” in terms of growth, adds Peter Gatzsch. They have new projects in the pipeline, including a current project for Enbridge that they have been working on for the past two years that could affect revenue significantly. Lignum’s staff pride themselves on their experience and skills. The European skills and attitudes the company was founded with are being passed down through every generation of employee. Lignum Interiors is proof that a small staff, handled professionally, can lead to outstanding work and a healthy revenue stream.

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on-sitemag.com / 43

LISTINGS

Activities

COMPANY LISTINGS We asked our respondents what qualities personify Canada’s Top Contractors. A few of their responses, some edited, follow in the listings. 3-D CONSTRUCTION MANAGEMENT INC. 916 Rundlecairn Way N.E., Calgary AB T1Y 3A1 T: 403-813-7463 $1,500,000 A, B, C, D, E, F, G, H, J, K, M, N, O, Q, R, S, T, U, V, W, X, Y, Z

AECON GROUP INC. 800 - 20 Carlson Court, Toronto ON M9W 7K6 T: 416-297-2600 www.aecon.com $2,700,000,000 A, B, E, J, R, S, T, W, X, Y, Z

ALBERICI CONSTRUCTORS, LTD. 1005 Skyview Dr., Burlington ON L7P 5B1 T: 905-315-3000 F: 905 315-3001 www.alberici.ca $137,000,000 E, F, J, M, N, X, Y,

ALLIED PROJECTS LTD. 7017 Farrell Rd., Calgary AB T2H 0T3 T: 403-543-4530 F: 403-543-4540 www.alliedprojects.ca $26,550,000 B, C, D, F, G, H, J, K, M, N, O, Q, R, S, T, U, V, W, X, Z

AVONDALE CONSTRUCTION LTD. 49 Hobsons Lake Dr., Halifax NS B3S 0E4 T: 902-876-1818 F: 902-876-1822 www.avondalecontruction.com $147,847,000 C, F, H, M, N, O

BEEDIE CONSTRUCTION LTD. (BEEDIE DEVELOPMENT GROUP) 3030 Gilmore Diversion, Burnaby BC V5G 3B4 T: 604-435-3321 F: 604-432-7349 www.beediegroup.ca $112,600,000 N, V

BENA CONSTRUCTION INC. 117 rue Front #200, Gatineau QC J9H 5S9 T: 819-682-4664 F: 819-682-6886 www.benaconstruction.ca $6,230,500 M, U, V

44 / JUNE 2015

BIRD CONSTRUCTION

5700 Explorer Dr., Suite 400, Mississauga ON L4W 0C6 T: 905-602-4122 F: 905-602-1516 www.bird.ca $1,364,500,000

BLUESCAPE CONSTRUCTION MANAGEMENT INC.

468 Queen St. E. Ste. 212, Box 12, Toronto ON M5A 1T2 T: 416-806-3272 www.bluescape.ca $120,000,000 V

BONDFIELD CONSTRUCTION CO. LTD.

407 Basaltic Rd., Concord ON L4K 4W8 T: 416-667-8422 F: 416-667-8462 $750,000,000 C, N, O, V, X, Z

BOT CONSTRUCTION GROUP

1224 Speers Rd., Oakville ON L6L 5B6 T: 905-827-4167 F: 905-827-0458 www.botconstruction.ca $125,000,000 A, B, W

BOWOOD INC.

4720 - 56 St., Red Deer AB T4N 2K1 T: 403-346-1908 $10,000,000 C, H, M, U

BOYES CONSTRUCTION LTD.

3 Victoria St., Burk’s Falls ON P0A 1C0 T: 705-382-2920 F: 705-382-2199 B, C, E, K, N, S, W, X, Z

BRIM CONTRACTORS LTD.

206 Souris St., Yellow Grass SK S0G 5J0 T: 306-861-6289 F: 306-465-2448 $700,000 C, E, M, U

BUTTCON LTD.

8000 Jane St., Tower B, Suite 401, Concord ON L4K 5B8 T: 905-907-4242 F: 905-907-8096 www.buttcon.com $140,000,000 C, F, H, M, N, O, T, V

CDC CONSTRUCTION LTD.

300-16 West 4th Ave., Vancouver BC V5Y 1G3 T: 604-873-6656 F: 604-873-3160 www.cdc-construction.com C, F, G, H, M, O

CHANDOS CONSTRUCTION LTD.

9604 20th Ave. NW, Edmonton AB T6N 1G1 T: 780-436-8617 F: 780-436-1797 www.chandos.com $286,000,000 C, N, O, V

CON-DRAIN CO. (1983) LTD.

30 Floral Parkway, Vaughan ON L4K 4R1 T: 905-669-5400 F: 905-669-5040 www.condrain.com $327,000,000 A, B, C, D, E, F, G, H, J, K, M, N, O, Q, R, S, T, U, V, W, X, Y, Z

The following letter codes are used to indicate areas of activity for the contractors in the listings on these pages. A Aggregates B Bridges C Commercial Buildings D Communication Engineering E Concrete F Contract Management G Demolition H Design/Build J Electric Power/Utilities K Environmental Remediation M General Contracting N Industrial Buildings O Institutional Buildings Q Marine-Related R Mining-Related S Oil and Gas-Related T Other Transportation Construction U Residential Houses V Residential: Multi-Unit W Roadbuilding X Sewer Y Structural Steel Z Waterworks

CONA CONTRACTING INC. 8220 Airport Rd. E., Mount Hope ON L0R 1W0 T: 905-679-1425 F: 289-280-0176 www.conainc.com $2,000,000 X, Z

COX CONSTRUCTION LTD.

965 York Rd., Guelph ON N1H 6K5 T: 519-824-6570 F: 519-824-6579 www.coxconstruction.ca A, M, T, W

CUSTOM CREATIONS INC.

150 - 2402 10th Ave SW, Calgary AB T3C 0K6 T: 403-444-8977 F: 403-451-1757 www.ccimanagement.ca $3,000,000 B, E, F, M, U

D-SQUARED CONSTRUCTION LTD.

6906 McKeown Dr., Ottawa ON K4P 1A2 T: 613-822-1042 F: 613-822-7717 www.dsqconstruction.com $12,835,000 A, B, C, D, E, F, G, H, J, K, M, N, O, Q, R, S, T, U, V, W, X, Y, Z

D. A. MCINTYRE CONSTRUCTION LTD.

203 17205 106a Ave., Edmonton AB T5S 1M7 T: 780-484-6333 F: 780-987-4098 $600,000 A, B, C, J, K, M, N, O, Q, S, T, U, V, W, X, Y, Z

DAWSON WALLACE CONSTRUCTION LTD. 4611 Eleniak Road NW, Edmonton AB T6B 2N1 T: 780-466-8700 F: 780-466-9613 www.dawsonwallace.com $230,000,000 C, F

DCM GROUP INC.

8315 chemin Devonshire, Mont-Royal QC H4P 2L1 T: 514-738-3033 F: 514-342-0368 www.dcmgroup.ca C, F, H, J, M, N, R, S

DELNOR CONSTRUCTION LTD.

3609 - 74 Ave., Edmonton AB T6B 2T7 T: 780-469-1304 F: 780-466-0798 www.delnor.ca $195,064,791 A, C, E, F, G, H, M, N, O, V, Y

DÉMEX INC

2253 Chemin de la Réserve, Chicoutimi QC G7J 0C9 T: 418 698 2222 F: 418 698 2421 www.demex-canada.com G

DINEEN CONSTRUCTION CORP.

GIFFELS WESTPRO 2 International Blvd., Toronto ON M9W 1A2 T: 416-798-5570 F: 416-798-5501 www.giffelswestpro.com $158,424,740 A, B, C, E, F, H, M, N, O, T, U, V, X, Y, Z

GOTTARDO CONSTRUCTION LTD. 277 Pennsylvania Avenue, Concord ON L4K 5R9 T: 905-761-7707 F: 905-761-6588 www.gottardogroup.com C, F, H, M, N, O

GOVAN BROWN & ASSOCIATES LTD. 108 Vine Ave., Toronto ON M6P 1V7 T: 416-703-5100 F: 416-703-5200 www.GovanBrown.com $155,000,000 B, F, G, M

GRAHAM GROUP LTD. 10840 27 St. SE, Calgary AB T2Z 3R6 T: 403-570-5046 www.graham.ca $2,100,000,000 B, C, F, H, J, M, N, O, Q, R, S, V, W

“

LISTINGS

Canada’s Top Contractors should have a focus on working together with clients, communities, trades and employees to have a positive impact on not only buildings and infrastructure, but also on people’s lives. A top contractor acts ethically regarding its financial transactions and business decisions, acts responsibly regarding its environmental impact and acts with concern for its employees regarding their safety and development. Finally, Canada’s Top Contractors continuously look for innovative ways to meet their clients’ needs.”

70 Disco Rd., Toronto ON M9W 1L9 T: 416-675-7676 F: 416-675-6987 www.dineen.com C, F, H, M, N, O, T, V

DOUG CLARK CONSTRUCTION LTD

228 Beattie Rd., Enderby BC V0E 1V5 T: 250-838-6230 F: 250-838-6258 $650,000 E, M, U, X

ÉDIFICE CONSTRUCTION INC.

107 - 16 Fawcett Rd., Coquitlam BC V3K 6X9 T: 604-395-8210 F: 604-395-8214 www.edifice.ca $9,200,000 C, F, H, M, N, O

ELLISDON CORP.

1004 Middlegate Rd., Mississauga ON L4Y 1M4 T: 905-896-8900 F: 905-896-8911 www.ellisdon.com $3,337,316,000 B, C, E, F, H, M, N, O, R, S, T, V

FLYNN GROUP OF COMPANIES

6435 Northwets Dr., Mississauga ON L4V 1K2 T: 905-671-3971 F: 905-673-3971 www.flynncompanies.com $570,000,000 C, N

GEN-PRO

2211 Plains Rd. E., Burlington ON L7R 3R3 T: 800-465-4653 F: 800-465-4653 www.genpro.ca $14,500,000 C, F, M

on-sitemag.com / 45

LISTINGS GRASCAN CONSTRUCTION LTD.,

KALMAR CONSTRUCTION LTD.

GRAYVELD BUILDERS CORP.

KIEWIT CANADA CORP.

61 Steinway Blvd., Toronto ON M9W 6H6 T: 416-644-8858 F: 416-644-8864 www.grascan.com $110,458,400 B, E, F, G, H, T, W 42 Campbell Ave., Oro-Medonte ON L0L 1T0 T: 705-487-1659 www.grayveld.com $700,000 H, N, Y

HARSE HOMES

3 Thorncrest Blvd., Dundas ON L9H 7L1 T: 905-689-7660 www.harsehomes.ca $1,450,000 H, U

HIPPERSON CONSTRUCTION

200 - 2161 Scarth St., Regina SK S4P 2H8 T: 306-359-0303 F: 306-359-0383 www.hippersonconstruction.com $2,000,0000 A, B, C, E, F, H, J, M, N, R, Y

HURON CONSTRUCTION BUILDING CONTRACTORS INC.

45961 Salem Rd., Clifford ON N0G 1M0 T: 519-327-8361 F: 519-327-8445 www.huronconstruction.ca $2,750,000 C, H, M, U

ITC CONSTRUCTION GROUP

564 Beatty St., Vancouver BC V6B 2L3 T: 604-685-0111 www.itc-group.com $265,000,000 C, E, F, H, M, V

JACOB BROS. CONSTRUCTION INC.

101 - 19162 22nd Ave., Surrey BC V3S 3S6 T: 604-541-0303 F: 604-541-0343 www.jacobbros.ca $120,000,000 B, C, D, E, F, G, H, J, K, M, N, O, Q, R, S, T, U, V, W, X, Z

JDG CONSTRUCTION

Box 10795, Lloydminster AB T9V 3A8 T: 780-871-2208 F: 780-875-9750 C, H, M, U, V

“

The qualities that personify Canada’s Top Contractors are leadership, an innovative vision, and a consistent drive to improve what works today and to create a strong framework for the future.”

46 / JUNE 2015

10035 Beaver Rd., Fort St. John BC V1J 1B5 T: 250-787-7118 F: 250-787-5110 www.kalmarconstruction.com $7,000,000 C, E, F, H, M, N, S 11211 215 St., Edmonton AB T5S 2B2 T: 780-447-3509 F: 780-447-3202 www.kiewit.com $2,810,123,672 J, N, Q, R, S, T, W

KON CONSTRUCTION LTD.

280 2770 -107th Ave. SE, Calgary AB T2Z 3R7 T: 403-230-4101 F: 403-230-3440 www.konconstruction.com

LA COMPAGNIE MELOCHE INC.

3125, Boul. St-Charles, Kirkland QC H9H 3B9 T: (514) 695-3395 F: (514) 695-2316 www.meloche-cmi.com $50,000,000 A, B, C, D, E, F, G, H, J, K, M, N, O, Q, U, V, W, X, Y

LEDCOR GROUP OF COMPANIES

1200-1067 W. Cordova St., Vancouver BC V6C 1C7 T: 604-681-7500 F: 604-681-9700 www.ledcor.com $2,900,200,000

LIGNUM INTERIORS INC.

202, 1608-17th Ave. S.W., Calgary AB T2T 0E3 T: 403-229-3144 F: 403-244-0056 www.lignuminteriors.com $64,500,000 C, F, M

LINDSAY CONSTRUCTION SERVICES

818 Watson Rd. S., Arkell ON N0B 1C0 T: 519-763-1162 F: 519-763-4672 www.lindsaycorp.ca C, F, H, M, U

MAISON D’ETRE DESIGN-BUILD INC.

118 West 2nd Ave., Vancouver BC V5Y 1C2 www.maisondetre.ca $2,500,000 C, H, M, U, V

MAPLE REINDERS GROUP LTD.

2660 Argentia Rd., Mississauga ON L5N 5V4 905-821-4844 F: 905-821-4822 www.maple.ca $352,000,000 A, C, E, F, G, H, K, M, N, O, Q, R, S, X, Y, Z

“

Canada’s Top Contractors are companies that have found their means in making an impact in the construction industry. They should be reinforcing the confidence Canada has in construction and changing people’s attitudes about the industry. They need to be supporting the structural desires of clients while applying innovative practices that increase productivity and quality in the products of construction.”

MARNA CONSTRUCTION LTD.

70 Silton Road, Unit 13, Vaughan ON L4L 8B9 T: 905-265-8222 F: 905-265-2538 www.marnaconstruction.com/

MEADOWLANDS HOMES LTD.

65 Sunset Dr., Portage La Prairie MB R1N 0X7 T: 204-871-6561 $1,300,000 E, F, H, M, U, V

METRO-CAN CONSTRUCTION

520 -10470 152nd St., Surrey BC V3R 0Y3 T: 604 583.1174 F: 604 583.3321 www.metrocanconstruction.com $100,000,000 C, H, M, V

MINI PAVERS INC

6-575 Clarke Rd., London ON N5V 2E1 T: 519-471-3911 www.minipavers.com C, E, F, N, O, U, V

MURRAY SCOTT CONSTRUCTION LTD 3212 48th Ave. E, Vancouver BC V5S 1H5 T: 604-715-9914 $501,655 C, F, H, M, N, O, U, V

NATIONAL CARPENTRY

78 O’Leary Ave., St. John’s NL A1B 4B8 T: 709-754-3737 F: 709-754-3715 www.marcogroup.ca $130,000,000 C, F, H, M, N, O

1429 Logan Ave., Winnipeg MB R3E 1R8 T: 204-654-2981 F: 204-669-3556 www.nationalcarpentry.ca $1,250,000 C, F, G, H, M, N, O, U, V

MARDINA CONSTRUCTION LTD

NEWWAY GROUP

MARCO GROUP

1083 Appel Rd., Agassiz BC V0M1A2 T: 604-796-2995 F: 604-796-2991 www.mardina.ca $9,800,000 B, C, E, F, H, K, M, N, O, X, Y, Z

3750 1st Ave., Burnaby BC V5C 3V9 T: 604-299-3709 F: 604-299-6209 www.newwayforming.com $45,000,000 C, E, F, H, M, V

O.N. SITE CONSTRUCTION INC.

2861 Sherwood Heights Dr., Oakville ON L6J 7K1 T: 905-829-8895 F: 905-829-8708 www.onsiteconstruction.ca $15,000,000 C, F, H, M

PHOENIX WALL DECORATION LTD.

709 Garyray Dr., North York ON M9L 1R2 T: 416-638-2889 F: 416-638-2778 www.phoenixwalldecoration.com $1,500,000 A, C, H, M,N, O, U, V, Z

O’NEAL GENERAL CONTRACTING LTD.

POMERLEAU INC.

377 Main Street, Aroostook NB E7H 2Z4 T: 506-273-6318 F: 506-273-2930

521, 6e Avenue, St-Georges QC G5Y 0H1 T: 418-228-6688 F: 418-228-3524 www.pomerleau.ca $1,624,000,000

PCL CONSTRUCTORS INC.

PRAIRIE NORTH CONSTRUCTION. LTD.

9915 56th Avenue NW Edmonton, AB T6E 5L7 Canada 780-733-5000 www.pcl.com $8,000,000,000 A, B, C, D, E, F, G, H, J, K, M, N, O, Q, R, S, T, V, W, X, Y, Z

PENFOLDS ROOFING INC.

1262 Vernon Dr., Vancouver BC V6A 4C9 T: 604-254-4663 www.penfoldsroofing.com $14,000,000 C, U, V

PENNECON LTD.

1309 Topsail Rd., St. John’s NL A1B 3N4 T: 709-782-3404 www.pennecon.com $326,803,842 A, B, E, F, J, M, Q, R, U, W, X, Y, Z

4936, 87th St., Edmonton AB T6E 5W3 T: 780-463-3363 F: 780-469-4967 www.dirtmoving.com $650,000,000 M, S, T, W

PRENTICE CREEK CONTRACTING LTD. 4503-44 St., Rocky Mountain House AB T4T 1A9 T: 403-845-6884 F: 403-845-6816 www.prenticecreekcontracting.com S, W

PRIESTLY DEMOLATION INC.

3200 Lloydtown-Aurora Rd., King ON L7B 0G3 T: 905-841-3735 F: 905-841-6262 www.priestly.ca $73,782,244 G, K, U

“

LISTINGS

ou must be an organization Y that focuses on developing and maintaining trusting partnerships with clients. These relationships are born out of continually producing quality results and fostering a bond with the client through open communication and transparency... By collaborating effectively, each project member is given an opportunity to do their portion of the work to the best of their abilities, which will positively affect the schedule and budget… Versatility, communication, organization and trust are the qualities that personify Canada’s Top Contractors.

on-sitemag.com / 47

LISTINGS

“

Many things are essential when considering the qualifications of Top Contractors. We strive and succeed in exceeding the expectations of clients, sustaining a safety-focused work environment, maintaining fiscal stability in hard economic times, understanding and protecting the needs of the community and keeping our workforce engaged and feeling appreciated.” PYRAMID PAVING (2006) LTD. 2075 River Rd., London ON N5W 6C4 T: 519-434-8380 F: 519-451-8776 A, C, F, M, N, O, U, V, W,

ROSATI GROUP 6555 Malden Rd., Windsor ON N9H 1T5 T: 519-734-6511 F: 519-734-7872 www.rosatigroup.com $40,941,735 C, N, O

ROXSON CONTRACTORS (1991) LTD. PO Box 726, Bala ON P0B 1C0 www.roxson.com $500,000 C, F, H, M, N, O, U, V, W

SALEM CONTRACTING LTD.

SECORD CONSTRUCTION

1940 MacLean Dr. Box 337, Timmins ON P4N 7E2 T: 705-268-0823 F: 705-268-4343 www.secordconstruction.com $6,000,000 A, C, E, F, G, H, J, M, N, O, R, S, Y

SILVER RIDGE CONSTRUCTION

446 Couleecreek Blvd. S, Lethbridge AB T1K 5S5 T: 403-381-4947 F: 403-381-4937 C, F, H, M, N, V

SMITH BROTHERS CONTRACTING CORP. 1354 Sandhill Dr., Ancaster ON L9G 4V5 T: 905-304-7720 F: 905-304-7725 www.smithbrothers.ca C, F, G, H, M, N, O

THE STATE GROUP INC.

3206 Orlando Dr., Mississauga ON L4V 1R5 T: 905-672-2772 F: 905-672-1919 www.stategroup.com $301,204,000 A, B, C, D, E, F, G, H, J, K, M, N, O, Q, R, S, T, W, X, Y, Z

STEENBERGEN CONSTRUCTION LTD.

Box 13, Site 12, RR#1, Barrhead AB T7N 1N2 T: 780-307-4980 F: 780-674-6608 www.steenbergenconstruction.ca $750,000 C, E, F, G, H, M, N, U, Y

STEPTOE CARPENTRY, INC.

110 Pony Drive, Unit #9, Newmarket ON L3Y 7B6 T: 905-853-1311 F: 905-853-1702 www.steptoecarpentry.com $1,350,000 F, G, H, M, U

STUART OLSON INC.

9097 Milwaukee Way, Prince George BC V2N 5T3 T: 250 564-2244 F: 250 564-7740

600, 4820 Richard Rd. SW, Calgary AB T2T 4S9 T: 403-685-7777 F: 403-685-7771 www.stuartolson.com $1,300,000,000 A, C, E, H, J, M, N, O, R, S, V

SCOTT BUILDERS INC.

SUNSHINE CONTRACTORS LTD.

8105 49 Ave. Close, Red Deer AB T4P 2V5 T: 403-343-7270 F: 403-346-4310 www.scottbuilders.com $251,000,000 C, F, H, N, O, S

SCOTT CONSTRUCTION GROUP Suite 1750, 3777 Kingsway, Burnaby BC V5H 3Z7 T: 604-874-8228 F: 604-874-0273 www.scottconstructiongroup.com $88,900,000 C, F, H, M, N, O, V

48 / JUNE 2015

“

P.O. Box 2458, Lac La Biche AB T0A 2C0 T: 780-788-7752 $8,000,000 A, B, C, K, M, N, O, S, T, U, V, W

TAGGART GROUP OF COMPANIES

3187 Albion Rd., Ottawa ON K1V 8Y3 T: 613-521-3000 x251 F: 613-526-7401 $300,000,000 C, F, M, U, V, W, X

TAURUS PROJECTS GROUP INC.

11401 - 85th Ave., Fort Saskatchewan AB T8L 0A9 T: 780-998-5001 F: 780-998-0210 www.taurusprojects.ca $52,000,000 F, J, M, N, S, W, X, Z

Reputation/reliability/references, tenure (longevity of the company), good communication skills, knowledge of permits, construction sequencing, expediting projects through government agencies, solid team of subscontractors.”

TIKI INTERNATIONAL INC.

Bay 2D, 624 Beaver Dam Rd. N.E., Calgary AB T2K 4W6 T: 403-241-1093 F: 403-241-8250 www.tiki-international.com $20,000,000 A, C, E, F, G, H, M, N, O, S, U, V, W, Y

TORA CONCRETE AND CONSTRUCTION

1930 12 Ave. NW, Calgary AB T2N 1J6 T: 403-275-7765 www.toraconcrete.com $600,000 A, B, C, D, E, F, G, H, J, K, M, N, O, Q, R, S, T, U, V, W, X, Y, Z

VAN BREE DRAINAGE

7074 Nauvoo Rd., Warwick Twp. ON N0N 1J4 $22,000,000 A, W, X, Z

VOICE CONSTRUCTION

7545 52 St., Edmonton AB T6B 2G2 T: 780-469-1351 F: 780-466-9378 www.voiceconst.com E, F, K, M, Q, R, S W

WALSH CANADA

2700 Steeles Ave. W., Vaughan ON L4K 3CB T: 905-532-0662 F: 905-532-0051 www.walshgroup.com $149,000,000 C, F, H, M, N, O, T, U, V, X, Z

WESTRIDGE CONSTRUCTION LTD.

435 Henderson Dr., Regina SK S4N 5W8 T: 306-352-2434 F: 306-352-0199 www.westridge.ca $76,400,000 B, C, F, H, M, N, O, V, X, Z

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Keeping on

TOP

Hard-core technology improvements for specialized machines BY DAVID GODKIN

renchers or drills are not iPhones – improvements made to their design tend to be directly related to profitability and productivity. It often is a conservative part of the business. In some cases, users want to get a decent rate of return on equipment they know well, rather than buying into the latest, most complex designs.

50 / JUNE 2015

We asked three underground equipment manufacturers and one service provider to explain what makes their new technology a must-have for the underground construction market at large. A smart designer will base his innovations on customer needs. A manufacturer’s next innovation is often the direct outgrowth of customer comments and

questions. Paying attention to customers’ concerns when they walk through the door of the dealership is a big part of that. One example of the proactive approach comes from The Toro Co. In 2013, it gave its customers a chance to pose detailed questions about Toro’s product line. According to Toro product training manager Barry Jackson, the questions were not long

InSite technology helps answer fundamental operational questions.

in coming. One topic was of particular interest: display technologies. Customers were asking, “Can you show me my mud pump? Can you show me any kind of hydraulic pressure? Can you allow me to adjust that pressure, thrust, or speed?” When the company started to research the issue, it quickly became apparent that there was a lot of additional information

that could be pulled from the machine and displayed, says Jackson. Additional programming, for example, allows operators to not only see hydraulic thrust pressure but also adjust it, as had been requested. Display icons also provide operators with real-time performance information of different drill functions (e.g., a drilling fluid pump icon that appears green

when the fluid is flowing and yellow when temporarily halted during pipe make-up). One reason display enhancements shot to the top of Toro’s to-do list was that they could be done without re-designing the full piece of equipment. That does not mean that Toro has shied away from ambitious design. Last fall, it launched a riding trencher, the RT1200. Mounted on

on-sitemag.com / 51

MR90 is compact machine suitable for urban environments.

a tool-carrier chassis, the machine can be reassembled as track or tire and can handle a range of attachments – from heavy-duty trencher drive to six-way backfill blade, vibratory plough or backhoe. In addition to a torsion shaft that absorbs shock loads, Toro has incorporated a flywheel that stores inertial energy for more efficient hydraulic system and chain operations and multiplying hydrostatic motor torque in the trencher’s planetary gearset. The object, Jackson says, is to “consistently transfer proper torque directly to the digging chain” to maximize digging power – something not always possible “if you’re using a direct drive motor on to the chain itself.” RT1200 taps inertial energy.

52 / JUNE 2015

“Any time it gets into a bind it physically stops that motor. The way our system is set up with the torsion bar and torque multiplier, it will not stop the motor. That torsion bar and flywheel stores that excess energy and allows us to power through tougher digging conditions.”

MANAGING ASSETS A lot has changed since Vermeer entered the directional drilling business back in 1991, says drilling specialist Curt Dobbin. For one thing, drillers no longer have to put up with manual levers and cables anchoring the guts of their equipment. Instead, electronic controls and telematics built right into the drills have become essential to any

operation, whether it is a small utility, a large pipeline or a sewer. In recent years, asset-management tools like Vermeer’s InSite technology have won interest. These systems allow owners to answer some fundamental operational questions about their small drill or larger drilling or trencher fleet, like “Where is my drill at the moment? What is its operational status – working or idle? How many gallons of fuel is it burning in a day? When is it due for service?” The questions become even more pointed when it comes time to work on the machine itself. Downtime is always an expensive proposition, especially for the smaller operation. “Back in the day,” says Dobbin, “you’d have to have a mechanic come out and trace wires and try to address issues.” These days, Vermeer’s electronic control system features CAN bus technology, with multiple control modules located throughout Vermeer’s T755 hydrostatic trencher. These provide real-time performance data and troubleshooting capabilities. “From my computer, I can see if there’s a fault on any drill that’s made now,” says Dobbin. “I can forward it on to my service department and everyone knows, the second there’s an issue. Many times, we can diagnose issues over the phone, where before a service tech had to go out. That’s the beauty of it.” It all serves the bottom-line, says Dobbin. “Downtime is not an option. So we’re

working diligently to try and make equipment more reliable and easier to diagnose.”

MAKE EVERY INCH COUNT… It can cost as much as $2,500 a day to contract out vac systems to dispose of drilling fluids. If that seems high, Ditch Witch’s senior HDD product manager, Seth Matthesen, says that even a smaller rig may have to dump once or twice a day. While recycling systems using mud motors to pump up to 300 gallons a minute are in common use for larger drills, Matthesen says he hasn’t seen those recycling systems in the largest market in the world – midsized drills. “That’s anything from a 20,000 to 60,000 lb. drill for utilities, larger oil and gas and municipal piping, you name it. The MR90 is a product we’ve developed with those drills in mind,” says Matthesen Of particular note are the MR90’s clean capabilities. According to Matthesen, a rig using mud pumps and pumping up to 400 gpm typically leaves behind high percentages of sand content. By contrast, anything that remains of the larger mud particles sifted through its first-pass shaker screen is collected in the MR90’s rear hopper for disposal and the cleaner material filtered once again through six 2.5-in. hydro cyclones and a final shaker screen. “If everything’s working properly,” says Matthesen, “our sand content should be less than a quarter per cent.” Another issue is machine size. Typically, recycling systems cannot be used in larger urban areas because of their footprint. Mounted on a 14,000-lb. trailer and roughly equivalent to a 500 gal. vac system, the MR90’s compact size makes it very suitable for urban applications, says Matthesen. Unlike other mud recyclers, the MP90 can also be pulled full of fluids – a huge advantage when time is a concern. “When you bring a lot of the other recycling systems to the job site, it can take half a day to set them up,” explains Matthesen. “Then, you have to bring water to them and mix your mud. Our system is plug-and-play.” Through all this, Matthesen readily acknowledges the indispensability of a good vacuum system. The MR90, he says “is

Hydrovac operations require both skill and experience.

not going to be a replacement for a vac.” A vac will still be needed for pot holing, daylighting “and there’s still going to have to be some clean up that has to be done.” The key is not only “to suck mud coming up from the ground” and clean it “but to utilize the mud recycler for what it was meant to do,” he says.

SPECIALTY TASKS Part and parcel of being a company that designs and manufactures its own equipment is the “vested interest” it has in pushing new solutions “out to every office as part of our overall safety program,” says Bryan Jones, Corporate Business Development at Badger Daylighting in Calgary, Alta. The company faces regular challenges in the technology. “Perhaps there’s a new task they’ve come up with that’s required in a gas-scrubbing plant in Wyoming,” says Jones. “While it might not benefit Toronto – guess what, it is going to benefit our team in Weatherford, Texas.” Similarly, the more than 1,000 water main breaks that occur in Toronto every year can make it a proving ground for other large metropolitan cities in North America. Expertise is key. Jones cites the example of those who buy their own hydrovac truck and send the crew out to locate and expose electrical lines. This poses an obvious and immediate hazard when using water. “They don’t even think of it,” says Jones. “They’re told that it’s safe to oper-

ate…but what do you do to protect your worker from injury?” Do not accept claims that hydrovac equipment can be used on the date of purchase at face value. Instead, owners must “sit down and carefully plan how they will be using the equipment,” says Jones. This includes obtaining as much information as they can about the hazards a hydrovac truck can encounter and ensuring that operators are well trained in the procedures needed to get the job done and protect themselves. Another factor to consider when choosing between purchasing equipment and hiring a sub is utilization rate. Jones says sometimes a general contractor will purchase his own hydrovac truck only to sell it a year later, because they hadn’t appreciated the harsh working conditions these trucks are subject to (e.g. minus 40 degree weather, storms etc.) and the need for constant attention to protect against mechanical failure. “Now you’ve got one piece of equipment that you’ve spent half a million bucks on and it’s shutting down your entire operation…Most contractors are experts at what they do, but it’s not as simple as flipping a switch and then you go.”

David Godkin is a B.C.-based freelance writer and editor. Send comments to editor@on-sitemag.com.

on-sitemag.com / 53

WORKING SMART New technologies automate routine machine operations to make operators more efficient and equipment more productive BY JIM BARNES

Volvo: The Human Machine Interface enhances an operator’s ability to focus on the job at hand.

fficient operators, improved productivity and better life out of your machines – there is a reason why various forms of machine control are slowly winning acceptance in the construction industry. We talked to some of the technology experts

54 / JUNE 2015

about the opportunities and challenges of moving forward with machine control. A number of forces are converging. Refinements in electrohydraulics have been a main driver, some of it resulting from recent needs to meet requirements for stricter emissions requirements. Electronic control

is another, as a generation of operators comfortable with joysticks enters the cabs. Brad Stemper, solutions marketing manager, Case Construction, points out the wide variety of technologies that can help the user in his daily operations. “It might be engine systems, cab features – it’s a constant evolu-

Caterpillar motor grader running with AccuGrade at night. equipment is operated: machine guidance, machine control and the human/machine interface.

MACHINE GUIDANCE

tion,” he notes. “These things might be seen as a little bit cumbersome or complicated from the outside sometimes,” he adds. “They really are not, and depending on what you’re doing, there are technologies that can really help you out.” Three fundamental technologies are helping to change the way construction

The benefits of machine guidance and automated grade control are widely acknowledged. Whether it is a 2D system based on lasers or a 3D system involving satellite systems, they help operators by taking the guesswork out of grading. The technology has been extended to other equipment like excavators. Originally, the machine guidance systems were add-ons. Those systems are still common, but today’s machine designers are building the necessary infrastructure for machine guidance right into the equipment. Deere’s machines come from the factory wired to accept any grade control system the customer wants. “The biggest thing we talk about when it comes to grade control is giving the customer the choice,” says Mark Oliver, product marketing manager, John Deere. “We will provide him a machine to accommodate any grade-control system that he wants.” Caterpillar builds automatic grade control right into the machine, as well. “Once we get that infrastructure – the CAN bus system – on the machine, it will work with any of the (sensor) components (you want),” says Scott Hagemann, market professional, Construction Technology & Solutions group, Caterpillar Inc. Cat’s AccuGrade system is based on GPS from Trimble Navigation, and the two companies are the

powers behind SITECH Technology, a dealer network of grade-control suppliers. That infrastructure makes reconfiguring the machine straightforward. For example, converting from 3-D to a 2-D system is simple. “He could have it ready to go in a couple of hours, because we’re using the same wiring and displays. We’re just putting different sensors on the blade,” says Hagemann. Komatsu, too, has designed the control technology into the fundamentals of the machine. Since the machine control technology is integrated into the basic structure of the machine, there are no aftermarket antennas or cables on the blade. The lack of blade-mounted sensors means there is no need for operators to climb on the blade to install or remove GNSS antennas, no coiled cables to snag and no electrical connections to worry about at the start and end of every shift. “When customers see the machine for the first time, they say ‘Wow – you’ve taken all the sensors and cables off the blade.’ What they cannot see is the added intelligence built into these machines. When they get a chance to operate the machines, they are really blown away,” says Jason Anetsberger, product manager, Intelligent Machine Controls, Komatsu America Corp. Anetsberger says that firms using third-party systems may not be getting the productivity they could. In recent tests, a Komatsu bulldozer with integrated machine control outperformed one using an aftermarket system by up to eight per cent in dozing efficiency.

on-sitemag.com / 55

Komatsu: no aftermarket antennas or cables on the blade. “We are using information from the drivetrain to get our knowledge of the blade load,” says Anetsberger. That is a level of sophistication that is not possible with an aftermarket system. It all comes down to the operator. “It might seem a little intimidating to the operator when he first uses the technology, but once he gets into it he sees that it’s a revolution in simplifying operation of the machine,” says Oliver. Grade control offers benefits to both experienced operators and rookies coming into the industry. “The experienced operators are very good at getting down to rough grade accuracy. The grade control system helps them be even more accurate, down to finished grade,” says Oliver. At the same time, the system helps rookie operators do satisfactory rough grade work. Grade control is not enough by itself; it has to be matched with a machine that can realize its potential. The key is getting the machine to react quickly to the information provided by the grade control equipment,” says Oliver. “Whether that is looking at track design or operator comfort and the suspension, let’s find out what the limiting factors are in keeping the dozer from going faster than it can today.” Jobsite practices are another issue. “It’s not just changing the operator; it’s changing your whole jobsite. Now you are relying on a base station instead of the surveyor.

56 / JUNE 2015

You have to rely on and trust the technology,” says Hagemann. There is a learning curve, Hagemann points out. “One of the first things is to get contractors to change their practices. They been doing things a certain way for a number of years, and they don’t see why they should change.” It takes a couple of jobs for them to realize that the technology is doing just what it is supposed to. “They learn to manage the jobs a little bit differently when they have machine control – for example, how many people they need – because they won’t need as many grade checkers.”

MACHINE CONTROL Grade control and GPS are only the tip of the iceberg when it comes to machine control. The same systems that support automated grade control work behind the scenes to make life easier for your operators in other ways. Joel Escalante, district sales product manager, West region, Volvo Construction Equipment, describes the Volvo technology as mechatronics – a fusion of hydraulics, mechanical power and electronics. It matches the hydraulic power to the available engine power in any job application to maximize productivity and fuel efficiency. The system is common among the firm’s wheel loaders, excavators, and trucks. “We manufacture everything in-house (en-

gines, hydraulics etc.) so it’s much easier for our engineers to communicate and build a more efficient system,” he says. “In reality, the customer doesn’t care what system you have in there. It’s all about machine reliability and helping both experienced and inexperienced operators maximize machine efficiency,” says Escalante. Most of the leading equipment designers have been integrating a number of operation modes into their machines, often with a view to improving fuel efficiency. Volvo’s ECO mode, for example, lowers fuel consumption during routine operation, maximizing the efficiency between the engine and the pumps. OptiShift is a transmission technology exclusive to Volvo wheel loaders that provides smooth shifting with automatic lockup in second, third and fourth gear, while the F-mode on the excavators supports fine movement and heavy lifting, allowing for greater precision in positioning. The company’s machine automation strategy is built around enabling the control system to determine what operators are doing and assist them. A series of routine operations associated with an application can be automated, according to Escalante. For example, with wheel loaders one common short-cycle operation is truck loading. With OptiShift, all the operator has to do is shift forward and back; he does not have to apply the brakes, since the system recognizes that he is truck loading and automatically applies the brakes for him so he is more efficient. He doesn’t have to remove his feet from the pedals, notes Escalante. “He can go a lot quicker, back and forth.” Besides making life easier for the operator and reducing fuel consumption, these systems reduce wear and tear on the machine. Operators new to these machines sometimes need an explanation on the differences. Where they may have been used to going full throttle all the time, that is counter-productive for the Volvo system. The control will ensure that all the torque the operator needs is there. If the operator runs at full throttle, the control assesses a need for speed – and it will give the operator everything he is asking for. He may

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Deere machines come wired to accept the user’s choice of grade control system. be trying to feather the joysticks, but the machine is still trying to give him speed. When operators ask if the special modes are slowing them down, Escalante says, “I can prove to them that they can work faster when they are using work modes.” He adds that “In a battle between brain and muscle coordination versus computer, we know who the winner will be. Let the mechatronics do the work as designed and at the end of the day, the operator will be less tired and more productive.” “Total machine control,” refers to the whole machine, not just the grade control, says Oliver. “With the hydrostatic transmission and electrohydraulic controls, you’ve got dynamic braking or “hill hold,” so that if you put it in neutral on a hill, the machine completely stops - it doesn’t roll back,” says Oliver. “You have counter-rotation ability while you are turning.” A lot of development in electrohydraulic systems took place as part of readying their machines for Tier 4 Final. Besides the reduced emissions, ease-of-use of the machine depends on the controllability and reaction time of the electrohydraulic system, according to Oliver. Designers increased the pump size to get better flow and optimized reaction time on the electronic side. Mechanical systems are still available for customers that want them, but the adoption rate for electrohydraulic systems increases every year, according to Oliver. Komatsu engineers have been extending intelligent machine control technology

58 / JUNE 2015

well beyond basic grade control systems. It has been a process of steady development, “from where we were a few years ago, with our first intelligent machine control bulldozer, to where we are today, with a family of six models including an excavator,” says Anetsberger. “Operating the dozer can be as simple as the operator shifting forward, tapping the blade lever down to start the pass, shifting to reverse and tapping the blade lever up at the end of the pass,” he notes. The technology reduces the workload on the operator, even experienced ones, with its ability to minimize shoe slip automatically, sense the load on the blade and start the cut. It ensures that the machine is used in an efficient, controlled manner. An automatic gearshift transmission and lock up torque converter team up to select the optimal gear range depending on jobsite conditions and load. “This electronically controlled transmission locks up the torque converter to transfer engine power directly to the transmission, eliminating horsepower loss and cutting fuel consumption by up to ten per cent,” says Anetsberger. Three groups of sensors – GPS, an inertial measurement unit and the strokesensing hydraulic cylinders – are connected to a central system that controls blade hydraulics. “The combination of those three groups of sensors allows us to know the position of the cutting edge accurately at any given time,” says Anetsberger. The machine automatically starts the

cut and lowers the blade in a controlled, optimal fashion. It senses blade load and minimizes shoe slip, getting the most out of the machine with every push – from rough cut to finished grade, says Anetsberger. “The technology is scalable, and we see this technology as beneficial to all sizes and classes of dozers,” says Anetsberger.

HUMANS AND MACHINES All the productivity technology in the world is useless unless the operator can use it intuitively and access it effortlessly in a comfortable environment. Escalante says that Volvo’s Human Machine Interface is as easy to use as a cell phone. “We’re trying to eliminate many of the switches from the panels to avoid confusion and at the same time make operation intuitive.” The control systems on various machines are similar, so when an operator moves from a loader to an excavator or a truck, he sees a similar operating system. Case has developed a snap-connection display. “You can pull a button and snap off the display and take it with you,” says Stemper. “Then you can snap it back on, and it powers up. It’s an easily transitionable product and users can reduce their costs by having just one display that they can take from machine to machine.” Keeping the amount of data presented to the operator on the screens manageable is another important issue. “There’s so much that the machine control could put on the display,” says Hagemann. “You need to keep it simple at first,” he adds. “You

Volvo OptiShift facilitates shortcycle operations like truck loading.

don’t want operators to be overwhelmed... Then you can bring on the more intense, more developed functionalities.” Ergonomics are another focus. Work is going into positioning displays ergonomically, so they do not obstruct the operators view. “There are no blind spots; the displays are right in the operator’s field of vision, says Hagemann. “If the displays and controls are positioned intelligently, it makes the operator better able to be aware of what’s going on around him.” The operator is still the crux of the operation. “If you can increase the productivity level of any level of operator, that’s very important to an owner,” notes Oliver. “Nobody wants to give up the human factor and say that the technology can do it all,” says Hagemann. The sign of a successful implementation is that operators do not want to give the technology up. “Once they

Case’s SiteSolutions Academy will help unify the approach to different aspects of machine automation.

realize what it does for them, and they have that in-the-seat experience, they see things in a new light,” he says. And that light can spread. “The experienced operator buys into the technology because he’s been doing the job for years and years and years and he can see the benefits,” says Hagemann. “Then, he brings the other less-experienced operators in.”

ACCESS TO DATA Case has introduced a program to make machine control more accessible to its customers. The Case SiteSolutions Academy will provide information on operation of equipment, entry-level training and a forum to share best practices. It is scheduled to launch in June. A centrally located information system and knowledge database, it ties into the

dealer network and the customers that are engaged on it. The need for the program comes from the different kinds of data the user faces. The problem with combining the data before now was that you have two different systems,” explains Stemper. The machine control system is one system, operating off the plan,” he says. The other end of the spectrum is the telematics, giving you operational data – not necessarily relative to machine control, but more about the operating characteristics of the machine, he adds. That Academy will operate as an information resource to align with the different technologies. Jim Barnes is a contributing editor to On-Site magazine. Send comments to editor@on-sitemag.com.

ADVERTISERS’ INDEX & WEBSITES Adrian Steel..................... www.adriansteel.com................................................... 45

John Deere...................... www.JohnDeere.com/Eskid....................................... 64

AON................................... www.aon.ca..................................................................... 26

Komatsu............................ www.komatsuamerica.com......................................... 35

B2W Software................ www.b2wsoftware.com/inform................................ 63

KPI/JCI.............................. www.kpijci.com...............................................................11

Bobcat............................... www.Bobcat.com/Road..................................................9

Kubota............................... www.kubota.ca............................................................... 33

Case................................... www.CaseCE.com/DSeries............................................4 Chevron............................ www.ThisIsSevereDuty.ca...........................................17 Dexter & Chaney............ www.dexterchaney.com/today.....................................7 Doosan Infracore........... www.DoosanEquipment.com/Darin..........................13 Erskine Attachments.... www.erskineattachments.com.................................. 49 Freightliner...................... www.FreightlinerTrucks.com/122SD...........................2

PCL..................................... www.pcl.com....................................................................24 Rogers Wireless............. www.rogers.com/switch............................................. 37 SMS Equipment.............. www.smsequip.com...................................................... 29 Mercedes-Benz.............. www.Mercedes-Benz-Vans.ca...................................19 Stihl.................................... www.stihl.ca.....................................................................21

Geith.................................. www.geith.com................................................................15

Topcon............................... www.topconpositioning.com...................................... 57

Husqvarna........................ www.husqvarnacp.ca................................................... 43

Towmaster Trailers........ www.towmaster.com.....................................................47

Irwin Tools....................... www.irwin.com...................................................31, 38, 39

Viewpoint......................... www.info.viewpoint.com/onsite................................ 23

on-sitemag.com / 59

Software By Jacob Stoller

Connecting the Cloud to the Field

he transition to the cloud is in full swing. Of 900 construction executives who responded to a recent survey conducted by Houston-based On Center Software, 31 per cent intended to move takeoff, estimating, and project management to the cloud in the near term. Amid the excitement, it is easy to forget that the cloud is not a killer app but an alternative delivery mechanism for IT that provides the same functionality available – at least in theory – from conventional servers. Consequently, while the cloud removes the need to support hosting infrastructure, the much larger challenge of introducing software into the user environment remains. The big change is that the cloud makes it possible for contractors with limited IT resources to adopt enterprise-scale applications. This puts many more construction firms face-to-face with the tougher questions of workflow planning, change management and user buy-in. It is critical to centre the conversation about new functionality on the business processes and the people who use them. Taking a view that technology will automatically improve a business is a recipe for disaster in the construction industry. “If you don’t have good buy-in on why something is needed, you run the risk of creating an application that either isn’t well-understood by the user or actually isn’t needed by the user,” says Jean Cunningham, author and lean management consultant who works with IT departments. The first step is making sure senior management leads the project. “If you don’t have the business partners involved,” says Cunningham, “this will create a huge

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gap between expectations of what the flow of new capabilities will be like and the results that you expect to get as you implement the system.” Lauren Hasegawa, co-founder of Kitchener, Ont.-based construction software firm Bridgit, subscribes to a similar approach. “We don’t approach this from the IT side,” she says. “We approach it from the construction side – we tend to talk about estimating, RFIs, safety – all those things. So we can act as the bridge between what they do in the construction world and software solutions that can help.” Hasegawa, a civil engineer by training who began her career in construction, was involved in developing specifications for Bridgit’s first products. “We spent months going on-site talking with project managers, supervisors, architects, engineers – everyone from the industry – just getting an understanding of what the challenges were,” she says. “A lot of the time, there is a disconnect between what’s happening at the office and on the site,” says Hasegawa. “These are two very different worlds, and they’re doing very different things. First, we have to get the site team on board, since they are the ones who will be using the new system. Then we can speak to the people in the office say, ‘This is what your people are doing, this is how much time they can save and here are the results you’ll be able to generate with them.’” When adoption is driven by the office, there is a tendency to go for functionality that is too complex to be practical in the field. “People get drawn into these systems that have all these functionalities and all these capabilities and they look really

impressive,” says Hasegawa. “But the problem is they are often really cumbersome or quite difficult to use. So you might get half the team using the software and half the team not using it.” If a process is being automated for the first time, it is essential to understand how that process works when it is done manually, particularly if that process is highly specialized. Cunningham often works with clients to map out the details. A simple flow chart, for example, is a useful tool for determining where software functionality can save the most steps. Decision trees really help you understand what you want the system to do, according to Cunningham. “Is the decision repeatable? Will the system have functionality for reducing errors? Will the decision require human intelligence?” Once you have defined your process, stick to your guns, says Cunningham. “Some software companies will be highly motivated to implement their software their way in your company. So you have to be very careful to be sure that your provider understands that you want the system to be implemented your way.” Another critical aspect of the vendor relationship is the long-term picture. It is impossible to forecast where you will be seven to 10 years down the road, says Cunningham, so you will need to count on your vendor to keep in touch with the industry. “Whatever vendor you select,” says Cunningham, “their capabilities will grow and change over time. Make sure they have a user interaction group, so you can talk with other users and where the provider is talking with other users. They need to be getting real input from real customers as they develop their product.”

Jacob Stoller is a principal of Toronto-based consultancy StollerStrategies. Send comments to editor@on-sitemag.com

RISK By David Bowcott

Performance security – Is your company optimally capitalized?

s your company optimally capitalized? Optimal capitalisation is driven both from inside your company (executive, board of directors and shareholders) and outside your company (regulators, clients and creditors). Let’s assume that it is external stakeholders that are demanding your current capitalization structure. Assuming that regulators have no issues with your capitalization, that would leave two main stakeholders driving your company’s current capitalization –clients/customers and creditors. Your customers want to ensure that you have the necessary capitalization to perform your contractual obligations. Further, they want to ensure they have access to various forms of security that will make them whole in the event you do not perform as required. Most call this performance security. It is not only put in place through the insurance industry, it is the security provided by your balance sheet, the project itself or a third party. In today’s global economy, you need to be aware of all forms of performance security that owners (and their lenders) are willing to accept. Knowing the performance security solutions available in your country, or even your continent, is not enough – you need to be aware of all forms of performance security around the world. If you can provide your customers with performance security that satisfies their needs and that security has minimal impact on your balance sheet, then you have a highly efficient performance security that will ensure you have optimal capitalization and a sustainable balance sheet. Let’s talk about the creditors. Credit is used for several purposes – loans for capital expenditures, revolver to shore up working capital shortfalls or letters of credit/surety bonds to secure job performance. Whatever you use credit for, the creditor will want some form of recourse against your company. For companies that are well-capitalized relative to the work they perform for their customers, the recourse may be limited (secured credit vs. unsecured credit). For others with less-robust capitalization, the security can be stringent (well-secured credit). Any creditor will assess your financial position or your capitalization relative to the obligations your company is taking on to determine how much credit they can provide, the security for that credit and the cost of that credit. Accordingly, these creditors can drive how much capital you require within your company to achieve your business goals. In order for you to achieve optimal capitalization, you need to

know all available sources of credit as well as the security they require. Now that we see how your customers and your creditors influence your company’s capitalization, let’s go back to our discussion of the myriad of performance security options available in the global construction economy. Remember, these solutions can be provided from your balance sheet, provided by the project itself and/or provided by third parties to your customer. Here is a sampling of the key solutions available. BALANCE SHEET Contractual guarantee

Parental company guarantee (PCG)

Direct charge on company asset PROJECT Cash reserve (fully funded)

Cash reserve (trapped)

Project contingencies THIRD PARTY PROVIDED PERFORMANCE SECURITY Letters of credit (Bank)

Performance security guarantee (Export agency guarantees bank or surety instrument)

Performance security guarantee (Surety guarantees bank instrument)

Traditional North American performance bond (50 per cent or 100 per cent).

Traditional North American performance bond (low penalty bond)

Adjudication bond (UK)

P3 Bond/PPP performance bond

Demand bond

Convertible bond

Adjudication bond (North America)

Subcontractor default insurance

Coverage for your obligations added onto subcontractor default insurance coverage

Optimal capitalization is achieved by knowing which of these solutions will satisfy your customer’s need for performance security while minimizing the constraints put on your balance sheet via the requirements of the creditor issuing said performance security. Vital partners to you in this process are your insurance broker, your risk advisors and your financial advisors. These business partners should be chosen based on their knowledge of global performance security solutions as well as their knowledge of how key stakeholders – like owners and debt – view these forms of performance security. David Bowcott is senior vice-president, national director of Large/ Strategic Accounts at AON Reed Stenhouse Inc. Send comments to editor@on-sitemag.com.

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CONTRACTORS & THE LAW by Lauren E. Kristjanson and Jack Finn

Reducing a claim: three ways to set-off

practical tool for any party is the remedy of set-off. In broad terms, a set-off allows a party to reduce the amount of the other party’s claim by a cross-claim arising from the same underlying events. The values of the two debts are then balanced against each other and the difference is “set-off.” For example, if a contractor is being sued by the owner of a project for $20,000 due to delay in completion, but owes the contractor $5,000 in outstanding payment, in some circumstances the contractor can deduct (set-off) the $5,000 owed to it from the $20,000 claim, making the claim against it $15,000. Canadian law recognizes three types of set-off: contractual, legal and equitable. All three were described by the Supreme Court of Canada in Holt v. Telford, [1987] 2 S.C.R. 193, which remains the leading decision on set-off.

CONTRACTUAL SET-OFF Contractual set-off is determined if there was an agreement between the parties that a right to set-off exists. The court will assess the contract(s) between the parties to understand the set-off rights conferred by the agreement. Using the above example, the contractor can set-off against the owner using a contractual set-off if the contract between the parties contains an express contractual provision clause that allows for set-off claims.

LEGAL SET-OFF The test for legal set-off has two parts: both obligations must be debts, and both debts must be mutual cross-obligations. Under the first requirement, the debts must

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be liquidated sums or money demands, meaning the debt cannot be an unknown amount. The second requirement, of mutuality, has three components: • Both obligations must be between the same parties. • The debtor and creditor must be liable solely to each other and not to each other jointly with third parties. • An assignment of the debt to a third party must destroy mutuality and thus the possibility of legal set-off.

EQUITABLE SET-OFF The test for equitable set-off has five parts: • The party relying on a set-off must show some equitable ground for being protected against the other party’s demands. • The equitable ground must go to the very root of the other party’s claim. • A cross-claim must be so clearly connected with the other party’s demand that it would be manifestly unjust to allow the other party to enforce payment without taking consideration of the cross-claim. • The other party’s claim and the cross-claim need not arise out of the same contract. • Unliquidated claims are on the same footing as liquidated claims. The two key considerations in equitable set-off are the close connection of the cross-claims and whether it would be manifestly unjust not to allow set-off. A close

connection will be satisfied if the set-off is related to the same or a closely related contract(s) or transaction(s). Equitable set-off is meant to be a simple but fair mechanism. As the British Columbia Supreme Court described in PCL Constructors Westcoast Inc. v. Norex Civil Contractors Inc., 2009 BCSC 95 at para. 53: “It would be unfair if a Sub-contractor who completes work for a Contractor, but who in the process causes damage to the Contractor equal to the value of the work done, had to first be paid before the Contractor could sue for damages.” Tweaking the contractor/owner example slightly, if the contractor was being sued by the owner for $20,000 and the contractor had an unliquidated claim against the owner for damages for breach of contract, the set-off available to the contractor would be an equitable set-off. In conclusion, set-off is a useful remedy, but it is important to remember the differences between the three types and to recognize which type of set-off applies to your counterclaim. Further, you must be careful before attempting to claim set-off. If you are not entitled to it, you may be in default for payment obligations. Therefore, you should seek legal advice before taking any steps to set-off. This article is for information purposes only and may not be relied on for legal advice. Lauren E. Kristjanson is a lawyer at the law firm of Borden Ladner Gervais LLP, practicing in the area of commercial litigation with an emphasis on contract and construction disputes. Jack Finn is a lawyer at the law firm of Borden Ladner Gervais LLP, practicing in the area of commercial litigation. Send comments to editor@on-sitemag.com.

YOUR VISION. BUILT TO SPEC.

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On-Site June 2015