Fall 2021 P3 Market Update with the Hon. Kinga Surma, Minister of Infrastructure
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14 October, 2021 Fall 2021 P3 Market Update with the Hon. Kinga Surma, Minister of Infrastructure
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October 14, 2021

The Empire Club of Canada Presents

Fall 2021 P3 Market Update with the Hon. Kinga Surma, Minister of Infrastructure

Chairman: Kelly Jackson, President, The Empire Club of Canada; Associate Vice-President, Humber College

Distinguished Guest Speakers
The Hon. Kinga Surma, Ontario’s Minister of Infrastructure
Michael Lindsay, President and CEO of Infrastructure Ontario
John Beck, Chairman, Aecon Group

Introduction
It is a great honour for me to be here at the Empire Club of Canada today, which is arguably the most famous and historically relevant speaker’s podium to have ever existed in Canada. It has offered its podium to such international luminaries as Winston Churchill, Ronald Reagan, Audrey Hepburn, the Dalai Lama, Indira Gandhi, and closer to home, from Pierre Trudeau to Justin Trudeau. Literally generations of our great nation's leaders, alongside with those of the world's top international diplomats, heads of state, and business and thought leaders.

It is a real honour and distinct privilege to be invited to speak to the Empire Club of Canada, which has been welcoming international diplomats, leaders in business, and in science, and in politics. When they stand at that podium, they speak not only to the entire country, but they can speak to the entire world.

Welcome Address by Kelly Jackson, President, The Empire Club of Canada
Good afternoon fellow directors, past presidents, members, and guests. Welcome to the 118th season of the Empire Club of Canada. My name is Kelly Jackson. I am the President of the Board of Directors of the Empire Club of Canada, and Associate Vice-President, at Humber College. I'm your host for today's virtual event, “Fall 2021 P3 Market Update with the Hon. Kinga Surma, Ontario’s Minister of Infrastructure.”

I'd like to begin this afternoon with an acknowledgement that I'm hosting this event within the Traditional and Treaty Lands of the Mississaugas of the Credit, and the homelands of the Anishinaabe, the Haudenosaunee, and the Wyandot Peoples. In acknowledging Traditional Territories, I do so from a place of understanding the privilege my ancestors and I have had in this country, since the 1830’s. I want to recognize that a few weeks ago, across the country, many dedicated time on the first National Day of Truth and Reconciliation to learn more about the experiences of Indigenous children who were forced to attend Residential Schools. Many of those individual stories are untold, buried with them in the land, and many survivors who tried to tell their stories, were not believed. I hope we continue to find ways, throughout the year, to honour these survivors, and to hear their stories. As we connect past actions to present realities, listening and learning from each other is so important, and we encourage everyone tuning in, to learn more about the Traditional Territory on which you work and live.

And now I want to take a moment to recognize our sponsors, who generously support the Empire Club, and make these events possible, and complimentary, for our supporters to attend. Thank you to our lead event sponsors today, Aecon, LiUNA, and Waste Connections of Canada, and to our supporting sponsors Chandos, EllisDon Capital, and Civic, Inc. Thank you also to our season sponsors, Canadian Bankers Association, LiUNA and Waste Connections of Canada.

I’d like to remind everybody today who is participating, that this is an interactive event. So, those attending live are encouraged to engage, by taking advantage of the question box by scrolling down below your on-screen video player. We will try to incorporate as many questions as possible throughout the discussion. If you require technical assistance, please start a conversation with our team, using the chat button on the right-hand side of your screen. We also invite you to share your thoughts on social media throughout the event, using the hashtags displayed on the screen. To those watching on demand at a later date, and to those tuning in on the podcast, welcome.

It is now my pleasure to call this virtual meeting to order. I am honoured to welcome the Honourable Kinga Surma, Minister of Infrastructure for the Province of Ontario, to the Empire Club of Canada's virtual podium, to deliver the “2021 Fall Market P3 Update.” And following the update, I'm delighted to announce that we have a special guest who will be joining us. Michael Lindsay, President and CEO of Infrastructure Ontario; Michael will be participating in the Q&A, along with Minister Surma. Before we hear from Minister Surma, I would like to invite John Beck, Chairman at Aecon Group to deliver some opening remarks. John, welcome. Thank you for your support. And over to you.

Opening Remarks by John Beck, Chairman at Aecon Group
Thank you, Kelly, for that nice introduction. And good afternoon, everyone. I'm pleased to be part of this event today, and Aecon is proud to be a lead event sponsor. Aecon has been a pioneer in the P3 market since its inception, and we continue to play a key role in delivering some of the most impactful P3 infrastructure projects currently underway across Canada. Here in Ontario, we’re part of the consortium building the Eglinton Crosstown Light Rail Transit, the Eglinton Crosstown West Extension Advanced Tunnel, the Finch West Light Rail Tunnel, the Highway 41 Expansion Mississauga to Milton, and the Gordie Howe International Bridge. In today's P3 Market Update, I look forward to hearing the latest plans for other exciting public transit and infrastructure projects, as well as key investments in healthcare, community amenities, economic growth, and job creation. So, without further ado, it's now my pleasure to provide an introduction for the Honourable Kinga Surma, Minister of Infrastructure for the Province of Ontario, and Member of the Provincial Parliament for Etobicoke Centre. I should say, I feel a kinship with Minister Surma, both of us having immigrated to Canada at a very young age. My family immigrated to Québec in the ‘50s, when I was 10 years old, to start a small concrete business, that would later become Aecon. Minister Surma came to Canada from Poland at the age of four and has become a very successful politician. Truly understanding the challenges that newcomers face, when beginning of their life in Canada. While I'm admittedly biased, I believe Minister Surma holds one of the most important, and impactful, portfolios of our Ontario Government. Minister Surma is dedicated to fighting for the people of Ontario and making sure they have the quality infrastructure and high-speed Internet, that will support generations to come. As I always say, building infrastructure is about building communities. Mr. Surma is committed to doing just that across the province, and ensuring that shovels hit the ground promptly, and that projects are built on time, all while looking out for taxpayer value. Previously, Minister Surma served as the Associate Minister of Transportation. Her mandate focused on collaborating with partners to build a better, smarter, and more integrated transit network, and subway plan. This included the construction of the province’s major priority transit projects, and the Transit-Oriented Communities Program. Minister Surma is a devoted community leader, who has comprehensive knowledge at all levels of government. And before I hand it over, I'd be remiss if I didn't mention that Aecon, and the private sector, look forward to working towards one of Ontario's most common goals, to successfully deliver critical infrastructure projects for years to come. It's now my pleasure to welcome the Honourable Kinga Surma, to deliver the Fall 2021 P3 Market Update. Thank you, and over to you, Minister.

The Hon. Kinga Surma, Ontario’s Minister of Infrastructure
Hello, everyone. Thank you, John, for that very warm introduction. And I would like to thank Kelly for her patience. She's right, I made a commitment to her that I would speak at the Empire Club event two years ago, in my previous role as the Associate Minister of Transportation, but was unable to because of the pandemic. That is why the Empire Club was my choice for today's update, and I'm very happy to be able to keep my commitment to Kelly. I'm thrilled to be here today to speak with you about the fall 2021 P3 Market Update, my first since being sworn in as the province’s Minister of Infrastructure. Before we get into the details of the update, I want to acknowledge Mike Lindsay, President and CEO of Infrastructure Ontario, who is joining us for our important discussion, and is sitting next to me.

The COVID-19 pandemic has taken a toll on each and every one of us. It has tested the strengths and weaknesses of every sector, and has highlighted many shortfalls, especially those in Ontario's healthcare sector. This pandemic has had a devastating impact, hurting communities, impacting local economies, and changing life as we once knew it. Throughout it all, we never stopped building. In fact, we recognized the urgency the pandemic called for, and expedited our efforts. Our government has worked tirelessly supporting the people of Ontario, ensuring they have access to high-quality services and supports they need most, now and for generations to come. Despite being faced with a global pandemic, under Premier Ford's leadership, our government has continued to uphold and invest in key infrastructure projects, ensured shovels were in the ground, that concrete was being poured, and that products continued to move to and from work sites. Our agency, Infrastructure Ontario has played a critical role in our ambitious and proactive efforts. Through these challenging times, IO has ensured Ontario's P3 program continued to remain the strongest in North America. And by continuing to prioritize and focus on the P3 program, IO remains a global leader in this sector. Because of the ongoing commitment of everyone at IO, and those in the sector, Ontario is building, maintaining, modernizing and upgrading our infrastructure like never before. Thank you, all of you, for making this happen. Without your hard work and dedication, Ontario's infrastructure projects would not be where they are today.

Now, I'm excited to share with you some highlights from the “Fall 2021 P3 Market Update,” released just before today's event. Today's update shows there are a total of 38 infrastructure projects in the works. This includes 25 projects in pre-procurement, and 13 in active procurement. These projects, combined, are valued at an estimated 60 billion in contract value. The list also includes 13 additional government-announced projects in the early stages of planning, as each project’s scope, timing, and delivery model, are being determined. The latest Market Update demonstrates our government's ongoing commitment to supporting and investing in large and critical projects across infrastructure sectors, such as hospitals, long-term care homes, highways, public transit, that will have a positive impact on residents and communities provincewide. It also builds on our dedication to transparency, and fostering a meaningful relationship with the industry, giving stakeholders such as yourselves the tools needed to organize time and resources, to ensure Ontario has access to robust, innovative, and competitive bids, for its P3 infrastructure projects.

The projects outlined in today's Market Update are just another way our government is investing in projects that are protecting people's health and wellness, and our P3 model is helping us achieve that. While we have many projects currently underway, the Fall 2021 Market Update shows us which projects are moving forward. These include the Unity Health, St. Joseph's Health Centre redevelopment, which has been moved into the pre-procurement stage, as well as three projects that have moved from pre-procurement to active procurement. These include the Scarborough subway stations, rail and systems, Kingston Health Science Centre, Kingston General Hospital redevelopment, and of course Trillium Health Partners broader redevelopment, Queensway Health Centre. And that's just a handful of the upcoming P3s our government is investing in. As always, the Market Update demonstrates our unwavering commitment to ensure Ontarians continue to have a good quality of life, address gaps in the system, and to make sure Ontario is more resilient in the future. Our government, through IO, is dedicated to making improvements to the approach, including examining how our P3 delivery model can evolve and adapt with the market, and continue to meet Ontario's infrastructure needs. In fact, based on your feedback, IO is confirming the use of a new progressive P3 procurement strategy, to enable certain upcoming projects. Three hospital projects, Waha, Civic, and Trillium Mississauga, and two public transit projects, Scarborough Subway, and Oncor, will use this new P3 strategy, which fosters collaboration between the owner and its contracting partner. During the early phase of the project, both sides will work together, to define project requirements, design, pricing, and risk, before entering into a final agreement. This progressive approach provides many benefits for both government and taxpayers, as it enables price certainty, and transparency, and will help to lower financial risks for all parties involved. Complex projects of that nature will require good-faith collaboration by all parties involved, and I hope you too are excited about these changes.

On October 4th, the Speech from the Throne “Protecting Ontario's Progress” highlighted our government's commitment to an economic and fiscal recovery, fueled by economic growth, not tax increases or cuts to spending. This speech also reinforces the government's plans to keep building and modernizing Ontario, and means continued investment and support, to build, maintain, and modernize Ontario's roads and highways, to ensure strong supply chains, and make transit more accessible to communities across the province. But it also spoke to preparing Ontario and making sure that our healthcare and long-term care sectors are better equipped to overcome challenges in the future. We're not just building, we're building with modern standards, and infectious disease controls, accompanied by HR and staffing strategies; we can then better protect our most vulnerable, and manage sudden increases in the demand for emergency care. We have an obligation and a responsibility to make sure Ontario is better prepared for any challenges that may come in the future. To arm Ontario for the future, it's critical that major projects that are delivered and maintained through our P3 model, continue to be successful. That is why we will continue to invest in our communities, continue to be transparent, continue to engage and listen to the market, and continue to evolve. The people of Ontario are counting on us, and we can't let them down. Through greater collaboration, together we can plan better, design better, innovate, assess risks, and manage budgets. The further we can stretch taxpayer dollars, the more we can build together.

Under Premier Ford's strong leadership, our government is actively ensuring communities, individuals, and businesses provincewide, have access to the goods and services, and supports they need in their day-to-day lives. But we can't do it alone. Our continued relationship with the many of you participating in today's event is vital. I want to take a moment to thank each and every one of you for your continued dedication to building and strengthening Ontario. It's because of you, I get to witness firsthand the incredible progress of West Park Hospital, when I am travelling back from Queen's Park to Etobicoke. In 2019, I joined the premiere for the ground-breaking ceremony; today I see the structure come to life. It's because of our collaboration, and your hard work, that we are getting even more critical infrastructure in place, that will make this province standout as a leader, with state-of-the-art infrastructure to last for decades. I am very much looking forward to our discussion after this, to listen to your input on how we can continue on this road to success. I really want to hear your thoughts on how we can overcome market capacity obstacles, where opportunities for standardization exist, and feedback on the changes we have made to our approach. And of course, if there's anything else that we as a government can do to build better and smarter, I'm all yours. Together, we will make Ontario healthier, stronger and more resilient. Thank you very much.

QUESTION & ANSWER

Kelly Jackson
Thank you so much, Minister Surma, for that critical update. I'd like to take the opportunity now to welcome Michael Lindsey, the President and CEO of Infrastructure Ontario. He is joining us for the question-and-answer session. And wow, you know, there's so much going on, so much packed into that update, it's amazing the amount of activity. I've got lots of questions for you, and I'm sure the audience does as well. So, just a reminder, for those who are participating live today, you can find the box to input your questions just underneath the on-screen viewer. And we are going to try to get to as many of them as we can. So, as the host for today, I guess I get the liberty of asking the first couple of questions to start the ball rolling here, and I'm wondering, Minister Surma, if you could just speak a little bit more about sort of why the importance of these updates, the quarterly, sort of the regularity that your government introduced, you know, why is that so important?

The Hon. Kinga Surma
Absolutely, and thank you for the question. Our government made a commitment to be transparent. I think we have an obligation and a responsibility to let the public know what we're investing, what our priorities are, but we also want stakeholders to be engaged in the process. We want them to be aware of the projects that are important to the province, where we are in various stages, so that they can prepare, so that they can participate in the process, so that they can—I recognize that all of the projects on our pipeline list are very complex. And I imagine it takes a great deal of effort and energy to be able to even just submit a proposal and participate in the procurement process. So, we want to give our stakeholders time to be able to prepare, to be able to put forward very good proposals, so that we can have very competitive procurement process, and so that we can have good quality products.

Kelly Jackson
Oh, yeah, I mean, I think it makes a lot of sense, especially knowing these last couple years, the impacts of COVID on so many businesses, and just having that ability to have a line-of-sight, to partake in the planning, I think is probably very welcomed from most businesses, small and large, who are involved with these kinds of projects. Now, this next question might be like asking a parent, you know, what's your favourite child, or who was your favourite child? But you know, as a relatively new Minister of Infrastructure coming in, so much activity happening, like, from your perspective, what, you know, what would you say are the most important projects that are either underway or in the early stages of being launched?

The Hon. Kinga Surma
Yeah, that is a very tough question to ask. I would say that I can never pick one over the other. Our province is so large, it encompasses so many different communities, so many different communities have different challenges, and so, I think all of the projects on the pipeline LISTSERV are certainly critical for each community where they will be built. I will say though, however, given the fact that we've been dealing with COVID over the last two years, a huge priority for this government is to fix the issues we faced in healthcare. We want to build hospitals across the province, we want to increase ICU capacity, we certainly want to build more long-term care beds. I think every single Ontarian in the province wants to know that we are taking care of our most vulnerable, and that, should they have a relative, or a friend, or a neighbour that needs care, that it is there for them. So, I will certainly agree that the projects focusing in healthcare and long-term care sector are a huge priority for our government. But, I will also say, given the fact that I was the Associate Minister of Transportation in the past, I do have a soft spot for our subway expansion plan. That was something that I worked, actually with Michael Lindsey, when he was Special Advisor on the subway file, to get these projects going, to build that transit plan, to work with the City, to form a collaborative process, and to get going. So, I certainly am very excited to be the Minister of Infrastructure, and continue to work with Michael Lindsay to make sure that they get built quickly and promptly. And I look forward to riding those trains with John and you, Kelly.

Kelly Jackson
Yeah, that sounds great. We actually have a couple questions coming in from the audience around transit. And so, since you mentioned it, I think I'll just pull one of those up to put to both of you, which is, you know, I think that many people are looking forward to hopefully things continuing to get back to more and more normal type activities, but there is some significant impacts in terms of COVID on transit ridership. And so, one of the audience members is, you know, wanting to know about, you know, if there's going to be a quite a longer recovery for those numbers to come back in terms of ridership, does that put the need for any of the transit projects kind of in doubt, or does that raise questions about, you know, the need to move on them now?

The Hon. Kinga Surma
Well, I think that is a fair question to ask, I have actually asked that question myself when the pandemic first happened, and in my previous role as the Associate Minister, when we were in our homes and not able to move around. I certainly asked those questions, but I would say no, it takes many years to build the subway transit plan that we have in place, it will take many years before it's operational. But we certainly should continue to build, I would hope that we are not living in a pandemic situation 2, 3, 4, 5 years from now. I represent a riding, and I'm at Queen's Park, in the largest city in Canada, that I believe will continue to grow and prosper. And we have to address traffic and congestion, which actually has swelled up because of COVID. People are a bit hesitant to ride the TTC or the GO rail system and are choosing to drive, but I hope that we would get back to a more normal life, and when we do, we want to have the best transit system in the world ready for them.

Kelly Jackson
Michael, in terms of the work that's underway right now with respect to the some of the big transit projects, are those something that, you know, internationally, people are sort of paying attention to, as you work with—you know, obviously, industry, infrastructure, it's such a huge piece, and, you know, some of these impacts of COVID are not unique to Ontario.

Michael Lindsay
Yes, absolutely, Kelly. First, let me say hello, I hope everybody who can hear my voice is healthy, and happy, and hopeful; I'm honoured to be here with you. Absolutely, to build on the Minister's comments, you know, the importance of these sessions, and the more or less constant dialogue we have with our market, is to better realize, to actualize, the vision of what is the largest programmatic investment in transit in the history of Canada. And at a tactical level, that has implied making decisions about how we bring these projects to market, their disaggregation, bundling of scope, different delivery models associated with how we wish to get after these projects, that have different configurations. So, it's in conversation with our market, a genuinely international set of players, that we come to realizations like advanced tunnel contracts can be let on a design, build, finance basis, for Scarborough and Yonge. Whereas, per this update, you know, stations, rail, and systems contracts, especially in a brownfield transit corridor, it’s better to do something far more progressive in respect of design and development. Or at Union Station, where we're building out one of the largest commuter rail expansions simultaneously, in respect to the GO rail expansion, you know, taking a classic alliance approach to those works at Union Station. So, again, I would just affirm how important it is for us to be in consistent dialogue with the market, to make sure that we're understanding the best way to achieve the vision that the Minister just specified.

Kelly Jackson
Another COVID-19-related challenge that many of us have heard about, has to do with supply chain issues and challenges. From sort of, again, from a very small scale, you know, individual consumer level, you know, you may not be able to get a product, of course, all the way to building materials not being available, challenges with certain technologies not being available. We've got another question from the audience wanting to know about, you know, whether the government's anticipating delays in projects being completed because of those supply chain bottlenecks. And if yes, if that's an issue, you know, how is that being planned for? How are you responding to that? Minister Surma, do you want to speak to that?

The Hon. Kinga Surma
I'll go first, and I'm sure Michael has something to add. It certainly is a real concern. I think we're all watching the news and seeing what's happening down in the US, and it certainly is a scary thought. This is something that we've been monitoring very closely throughout the pandemic; those were exact questions I was asking in my role months and months ago. I know Michael and the team at IO, and the Ministry of Infrastructure, are working very closely with stakeholders to have those conversations, to flag any issues and raise them with us, with government, bring them forward whenever necessary, so that we can address them. This is something that the Cabinet table is concerned about, and looking very closely as well, and as a caucus, and as a team. And what I would say, I think that this also presents a very good case for why we need to, in Ontario, continue to build highways. Most of our goods in the province of Ontario, whether it be vaccines, ventilators, food, medicine, is transported through commercial truck, using our very good highway network. And so, we need to continue to rehabilitate it, and make sure it's safe, and expand it, so that those very important goods, but also, materials for construction site can get on site, and service the workers, and serve Ontarians. I'm sure Michael has a few other points you'd like to add?

Michael Lindsay
I do, Minister, thank you. And we're trying to be careful with muting everybody, just to protect you from echoes, so forgive us if there's a lag—I'd rather be sitting on stage next to the Minister. First, Kelly, let me just salute our partners, if I can, who have continued to make progress on all of our construction sites, in connection to this indispensable infrastructure during the course of the COVID-19 pandemic. I think the count is about a half a dozen projects, disproportionately in the health space, that ultimately came to substantial completion, and occupancy, at the start of operations, during the course of COVID-19. Indeed, just to pick one example, it was the completion of the Cortellucci Vaughn Hospital, that gave the province additional capacity, that could be used on a dedicated basis for COVID patients, in the worst of phase two. So, just a big thanks to all our industry partners, and to all who are listening, yes. You know, on the commercial side of things, we will continue to have conversations about what the direct and indirect impacts of COVID-19 have been on these projects. But to your question, Kelly, what I observe, is I observed very thoughtful approaches, by counterparties, to try to be planful in respect of some of these discontinuities. Just this morning, I was talking to my team about, you know, an import delay, and I observed our counterparties doing what they do best, accelerating shipping timelines, even if materials are leaving, you know, ports of exit later than anticipated. I've observed the government, in connection—for instance, that same Cortellucci Vaughn Hospital—talking to counterparts in the United States, the Province of Québec, in order to ensure that there's a priority placed on materials coming for healthcare facilities. So, yes, the discontinuity is a real, I think we have to be candid about that, but what I genuinely appreciate is the partnership that I see, in trying to resolve and mitigate these risks when they crop up. And as a final thought, Kelly, you know, we have, ever since last summer, as evidence of some of the evolution of our thinking vis-à-vis our classic P3 models, been quite thoughtful about what our project agreements do and do not specify, about the mitigation of risk related to the continuing impacts of COVID-19. It's another excellent example of how, in conversation with our market, we feel like we come to a defensible, understandable place in respect of risk transfer for these types of risks.

Kelly Jackson
Yeah, I think that idea of like adapting and evolving the approaches, to ensuring a productive set of partnerships with the industry is something that's so key, and obviously something that is, you know, front and centre, in the way that both the Ministry and IO are approaching things. I know that Minister, you spoke a little bit about this new sort of progressive P3 procurement strategy in your remarks, and just wanted to go back and touch on that, and can you just talk a little bit of sort of, you know, again, just walk us through how that evolved, and how that came to be. I think you might be on mute.

The Hon. Kinga Surma
I knew I was going to do that at least once today. Even prior to COVID—and Michael can attest to this—when we were speaking to the market, you know, we did see some changes, concerns were raised. And then obviously when COVID hit, and then we had even more challenges, and other issues to deal with, but we kept on building. And our government certainly recognizes that we need to fix gaps in the system, we need to build healthcare facilities and long-term care facilities fast, we have an ambitious plan, we have $145 million that we want to spend in a decade, to make sure that Ontarians can have a good quality of life. And so, one of the things—and again, I’ll mention my previous role as Associate Minister of Transportation—one of the things that we were very successful on was collaboration. And throughout COVID, I have found that Ontarians, no matter what industry and sector, always want to collaborate and work together, to get through this difficult time. And one of the things that we are looking at, through the progressive procurement model, is greater collaboration between the owner and the contractor. Together, they will look at plans, designs, pricing, budgeting, all of those aspects, that will then lead into, ultimately, a fixed-price and a final agreement. But I'm very supportive of this method, because we are building such complex projects across the province. And we want to make sure that we are building them efficiently, and that we are providing those supports to the people of Ontario.

Kelly Jackson
I want to thank Simon for the question, give a little shout out to Simon for that one. But it looks like Michael, you might want to add to that.

Michael Lindsay
Kelly, if I can, with my thanks. Just, this is a reasonably sophisticated audience, I know, out there, and they'll appreciate that really, it's about the right tool for the job. You know, what we'd want to stress, is the P3 model, that Ontario really is world-renowned for, design build finance, design build finance maintain models, we'll continue to be on the social side of our business, with some of the updates and evolutions that we've been talking to the market about, the primary mechanism that we'll use to deliver projects in the province of Ontario. But, as the Minister rightly says, there are projects that, given their innate characteristics, call for a different approach. When asked to build, you know, four long-term care facilities of quality as rapidly as we can, anybody I know who has been around the construction industry will appreciate that a fixed price, fixed schedule, DBF or DBFM, for those sorts of works, just wasn't going to be the right model, so we created a modified CMNR approach. And this progressive P3 approach that we're talking about today in connection to Civic M Site in Mississauga, and Waha, equally is connected to the risk characteristics of those projects. They're large, they're staged, they exist, at least two of them, right next to large transit projects that are also being built in the province of Ontario. And so, even if the resultant contract form, at the end of the development phase, is as it always has been—a DBF, or DBFM—as the Minister rightly says, we think there is a different way to think about how, through a thoughtful period of collaborative project design and development, we work with our partner to ultimately come to a better understanding of what project risks are, and how we collectively mitigate them. And so, I'll just say thank you, once again, to a market that has been quite influential in our thinking about how to do this the right way.

Kelly Jackson
I know you mentioned a couple of the examples there, but one of the other follow-up questions we’ve had from the audience is: could we repeat the three hospital and two public transit projects that will introduce this new P3 strategy, and the opportunities and challenges that are going to come with that?

The Hon. Kinga Surma
Certainly, we’ll consider it, absolutely. It is a new model that Ontario will be using, but if it works, if it's successful, if partners truly collaborate from both sides, and can get the project done efficiently, the public will see it. They will notice it, we will hear about it, and it will certainly be something that we will consider using for more projects in the future.

Kelly Jackson
Michael?

Michael Lindsay
And maybe just to build on the specific question, Kelly, they are again: the redevelopment of the Trillium Health Partners M Site, at the corner of Hurontario and Queensway, the redevelopment of the Ottawa Civic, and the Weeneebayko Area Health Authority Hospital in Moosonee— which is not as large or complex as the other two, but has a whole bunch of other risk coefficients associated with it, given its remoteness, and some of the challenges around geographic access. On the transit side, it's the balance of works on the Scarborough subway systems, rail, and stations, and the On-Corridor component of the GO rail expansion. A bunch of early works projects, where we're quite privileged to work with Metrolinx, delivering those. This On-Corridor procurement, those in industry will know, is about effectively the building out, of really the platform on which bidirectional, 15-minute service will happen in the future, and the operations contract that goes with it. So, those are the list of projects to which we're applying this more progressive approach.

Kelly Jackson
Thank you. We've got another question coming in. This one's from Andrew, and this one's a little bit near and dear to my heart, because it's about a skilled labour shortages; and as somebody whose other hat involves working at Humber College, always thinking about, you know, trying to meet labour market needs. So, Andrew wants to know, how will skilled labour shortages affect the ability to deliver these kinds of projects, and how is the Ministry, and Infrastructure Ontario, working to address the growing labour shortage in construction, specifically?

The Hon. Kinga Surma
Thank you, Andrew, for the question. The shortage is, that we see, close to 300,000 unfilled positions in the province of Ontario, it is concerning, especially when you have a huge, an ambitious plan to build infrastructure across the province. But to reassure all of the folks that are watching this, and listening to this, and participating, this will take a whole of government approach, to make sure that we can channel people in the right direction. I know the Minister of Labour, who actually used to be the very first Minister of Infrastructure when our government was elected, is very much aware of this; we're having constant conversations, not just us two, but as a cabinet. He is investing close to $500 million, over four years, to make sure that the training and apprenticeship programs are there. The Minister of Education has also made adjustments to the curriculum to encourage young people to enter these good-paying jobs. And I would just say, these are excellent jobs, and you get to be a part of building this province with us. And so, we are translating that message, we are getting out there and speaking more and more about it, and I know that IO is also doing its own research and analysis, to make sure that we have the numbers necessary so that we can build these projects. And I know what Michael, actually will say—we've been spending a lot of time together—he will also say that when we release the procurements and the timelines, we also take into consideration market capacity, as well as labour, so that we can plan them accordingly, so that we have enough people to help build these projects with us.

Kelly Jackson
Thank you. Yeah, I think as well, you know, I mean, obviously, with the, you know, you talked about Minister McNaughton, and all that's underway, and even, you know, I just know recently the Skills Development Fund was released. And that was with the, you know, quite a significant amount of funding made available, much bigger than even originally thought for the second round, all about trying to find new ways to bring in underrepresented group, equity-seeking groups, and just others, newcomers, to connect them into these really great, rewarding, you know, well-paid careers within construction and related industries. So, you know, I think definitely we've seen, what we've seen a lot of a lot of things over the past couple of years from this government in the skilled trade spaces. And I think that's been that's been really exciting. We've got a question from Venkat. I'm just pulling it up here. It's, okay. The province has completed two successful long-term care projects under the Accelerated Build Pilot Program. And are there going to be plans for more projects under this program?

The Hon. Kinga Surma
I'll take a stab at it first, Michael. We were very excited about the Accelerated Build Program. When COVID hit and there were quite difficult situations across the province, and I can even reference a situation in my very own riding with Humber Heights and Eatonville, and the unfortunate passing of our most vulnerable, it really touched all of us; and no one was more upset than the Premier himself. And this was really, this whole Accelerated Build Program was really developed—he led this process, and he feels very, very strongly that he wants to build, wants to continue to build long-term care beds, to address the demand now, but also the future demand, so that we can take care of our most vulnerable. This was a learning exercise for us, though. As you can imagine, it normally takes about eight years to build a long-term care facility, and we're doing it in between two to three. So, we have all hands on deck on this one, we've used every single resource, and IO has really shown great leadership on this. We know how many long-term care beds we need to build in the province, and we will be reviewing how the process has unfolded, what else can we do differently, but we have big targets to meet.

Michael Lindsay
Well, said, Minister. I would just, if I could, provide a little bit of detail of what we have learned, because you know, to those in industry, I think this will be interesting. We've learned an incredible amount about the design of LTC facilities, and I really would commend Minister Phillips and his team at Long Term Care. The facilities that have been designed on a rapid basis far transcend the 2015 standards, they contain behavioural units, and dialysis units; so we've learned much about design. Means and methods of construction, you know, and the value associated with modular construction, has been a big learning for us in connection to this. And it's part of what we're delivering right now—it sometimes doesn't get the same attention, but it's one of my favourite projects. We're building right now in Kenora, and Thunder Bay, on a rapid basis for the Solicitor General, extensions to the Thunder Bay and Kenora correctional facilities on a modular basis too, using the same procurement mechanism that we did for long-term care. And to the Minister's point, we learned also a ton—and here the government deserves all the credit—about how to partner with local municipalities in respect of expediting, permitting, and site plan approvals for the sites. Regardless of what project we're doing this is—I think, I can say, with all the love in my heart—one of the risks we always bear, how fast do we get third-party approvals? And I think we've learned quite a bit, given how needed these facilities were, and how urgent the need was, you know, how to find a different gear of partnership with municipal partners in respect of some of this, from a cold start, right? So, the lessons for sure of that experience are going to resonate across everything in our pipeline, I would expect.

Kelly Jackson
Thank you for that. We're getting a lot, you know, lots of questions about the new progressive model—as you can imagine, it's big news today. One of the questions is pretty straightforward, Christine is wondering if there's going to be some kind of market education sessions on the model, or sort of, you know, obviously, today's a great first way to just sort of introduce this, that this is something that the government is going to be implementing or undertaking. What's planned to try to, I guess, help the market understand more about it, and what's that going to look like?

The Hon. Kinga Surma
Well, you're absolutely right, Kelly, it was our intention to formally introduce this progressive procurement model, we saved it for the Empire Club, and for you, and for all of the stakeholders that are participating today. But I will pass it on to Michael to let our good stakeholders know what the next steps are.

Michael Lindsay
Yes, indeed, Christine, you are going to be tired of the sound of my voice, if you aren't already, on this model. Two weeks ago, we had over 300 industry participants sign up for an IO-led presentation, where we began to showcase some of our thinking, in respect of the model; we are going to continue to do that more or less incessantly. And again, it's entirely because I think we are instructed and educated in respect of the best way to think about the facets or parameters of these models, by the continuing conversation that we have with our market. But yes, rest assured, lots coming, both in respect of engaging industry and one-off meetings or in group settings, but also increasingly us publishing, for public consumption, sort of the parameters of this model and how we intended to work.

Kelly Jackson
One of the other questions has just been about, you know, sort of this early market reception so far of this. So I mean, I know, I get it’s the official announcement, and you mentioned having, you know, certainly having done some early outreach. So, has there been any indication of that, or is that to come so?

Michael Lindsay
Look, it's always dangerous, I suppose, for me to characterize the market's reaction to something that we've put out there, but I will say that I think that there has been a lot of optimism. There's certainly been a recognition that certain projects lend themselves to a different approach to design, and development, and partnership, no doubt about that. And I think it's equally fair to say, being candid, that we are seeing other jurisdictions within Canada, and beyond, also thinking about how the momentum and the complexity of projects impacts the way in which they want to bring them to market. So, as it is, we're sort of part of a wider global conversation that's happening. I would say, Kelly, that I think both messages have been well-received by market, both the fact that we're going to use this model, but also the fact that the P3 model, which Ontario has made world-renowned, will continue to be a very prominent tool in the way in which we bring projects to market. It's understood, it's, you know, it's to the benefit, I think, of both public and private sector, in respect of the way in which it incentivizes performance and allows for innovation. So, I just want everybody who's listening to me to understand that it is really a parallel track of developing this progressive model for the projects that merit it, but simultaneously, never failing to continue to talk to our market about how classic P3 models can work better.

Kelly Jackson
So, I think we probably have time to fit, like, I'm going to try to get at least one more question in here; we probably go on for at least another hour, given the amount of interest that we're generating. So, I know you just talked about, you just ended, you know, speaking to that, Michael, you referenced like the “classic” model, so maybe you can just give people a quick recap on, you know, Kevin's wanting to, you know, just really get that clarity on sort of the new the new progressive structure versus the classic one, and maybe just what are the one or two sort of key differences. I'm sure they're, you know, sort of many, if we really want to unpack it, but high level, what's the couple of big key differences there that people should take away?

The Hon. Kinga Surma
A similarity will include an RFP process; the difference, truly, is the development phase. The development phase will extend for a period of time, and that is when both parties will come to the table and discuss designs, planning, pricing, and risk—especially risk—and come to a final agreement, and then that proponent will then have to implement this project. So, I think that the biggest difference is really that period of time, the time in which we expect parties to truly collaborate in good faith so that they can assess the risks properly, and so that we can have a very smooth implementation period.

Kelly Jackson
Thank you. Michael, did you want to add anything to that?

Michael Lindsay
Just maybe a few things. The Minister is exactly right, slightly different bases of procurement would be another thing that I would highlight, right? So, single-stage, as opposed to a two-stage process, qualification and submission reviewed at the same time, different basis of evaluation, you know, focus on experience, team cohesion, the approach that they intend to take, the development phase and its schedule, and a development phase price, a fixed price for participation in the phase that the Minister has just talked about. So, faster to a partner by design, right? On the basis of wanting to spend more of the time than we would typically spend in market, in the development phase that the Minister is just referenced. At the end of the development phase, particularly on the social side, we think having had a thoughtful conversation with our market about the risks attendant to a project, identifying them, coming up with plans to mitigate, provisioning for them in respective contingencies where it's ultimately required. We might then enter into a very classic contract form, a DBF or a DBFM, but it is that development phase that allows us just greater transparency in respect of a project's risks, and the things that we can do to ultimately better deliver it. I think, you know, these would be the sort of the key changes that people will see, when we continue to talk to the market about this model, and what it entails.

Kelly Jackson
Thank you. So, as we look to wrap up our conversation for today, I'm just wanting to give you both an opportunity, and maybe we’ll start with you, Michael, so that, of course, we can make sure the Minister gets the last word—I think that's ministerial prerogative—just, you know, obviously it's, as we know, there is so much underway. There's still obviously, you know, there's still a lot of uncertainty in terms of navigating the pandemic, and we're all sort of living that on a day-to-day basis and business basis, government's working through that on so many different levels. But as you look forward, right, and you look forward into, you know, the rest of 2021, 2022 and beyond, you know, maybe would just be great if you could wrap up with your thoughts on sort of what's really exciting, right? Like, what, you know, what are those things that Ontario can be excited about, in terms of the work that's happening, that’s underway?

Michael Lindsay
But thank you, Kelly. Excellent, expertly moderated, I must say, and my thanks to the sponsors as well. I also want to thank Minister Surma for her leadership on this file, but in government more broadly, in respect of this pipeline that we are bringing to market, she's an indispensable partner to us and a leader at IO, and I want to thank her for that. To your question. On this, the 650 employees of infrastructure, Ontario, I think, are unified by a real excitement to get up every day and build the connective tissue of society. That's really what we're doing. And it was important prior to the COVID, 19 pandemic, but the notion that bricks and mortar, and systems, and infrastructure investments, ultimately help bring us closer together, help keep us safe, allow us, ultimately, to get back to the places and spaces where we can be not only productive, but creative with one another, is really exciting. So, just generally, on behalf of my organization, I would say, you know, that's something that really enthuses us. Specifically, you know, we're quite privileged to be able to be part, not only of a generational build-out of infrastructure that was so desperately needed in the province of Ontario, but to have supplemented that pipeline with things that are directly relevant to helping people continue to navigate the course of this pandemic, and to recover from it. So, couldn't imagine, just couldn't imagine a job that's more exciting. And I think I speak for the employees of IO when I say, that's what really excites us about the year ahead. And the fact that we get to do it with such talented partners is just the best.

Kelly Jackson
Thank you, Michel, Minister.

The Hon. Kinga Surma
And thank you, Michael, that was certainly a kind thing to say. I would just like to thank everyone who joined in today. I want to thank all of our stakeholders, I want to thank anyone that's participated in our procurement process, that's, that's a part of building Ontario. I think that coming out of this tough situation that we've been in two years, I think we really have an opportunity to recover together, to drive our economies, to build this province, to build healthcare, right? And I think everyone can be a part of it; I think we have an incredible Ontario spirit. Being Minister during this time, which, I never anticipated to be a Minister or an elected official during a global pandemic, but as the local MPP, and the Minister of Infrastructure, and I've seen some incredible things. And so, I am very grateful to the Premier, and to cabinet, and caucus, for giving me this privilege to serve as Ontario's Minister of Infrastructure. I'm extremely excited to continue working with Michael. He's truly an asset to the government, and I think we have an incredible opportunity to build Ontario together.

Note of Appreciation and Concluding Remarks by Kelly Jackson
Thank you, Minister Surma, and Michael, for joining us today, and thank you both for your leadership. I, you know, there is so much to be excited about in Ontario, and looking forward, and I think that generational builds, you know, is something that we don't have to have time to take that moment and step back and think about, just sort of the magnitude of what's happening now, and how that is really going to continue to transform our province and build a very different legacy going forward. At this point, we would usually hear from one of our lead sponsors to deliver some closing remarks, but unfortunately, Izzie Abrams, the Vice-President of Government and External Affairs for Waste Connections of Canada, could not be with us today. But has relayed his comments, and I'd like to read those to you now.

So, Izzy would like to thank everyone for their participation. He wants to make sure that we all recognize, you know, just how important it is, you know, from an industry perspective, to hear directly from the Minister on the future of infrastructure projects in Ontario, because they also show a vital component of the economy. On behalf of Waste Connections of Canada, and their 3000 employees, they would like to thank Minister Surma for sharing the Fall Market Update; they are very proud to be a lead sponsor for the event. Thank you again, Izzy, thank you Waste Connections of Canada for your support. Again, to Minister Surma, Michael, and everybody who joined us today, or who will be tuning in and watching this at a later date, or listening in on the podcast. Our next event at the Empire Club of Canada is on October 18th at 12 noon, Eastern Time. It's going to be a panel discussion moderated by Peter Mansbridge, on “The Affordability of Ageing at Home.” More details, and complimentary registration are available at empireclubofcanada.com. This meeting is now adjourned stay safe and have a great rest of your day.

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Fall 2021 P3 Market Update with the Hon. Kinga Surma, Minister of Infrastructure


14 October, 2021 Fall 2021 P3 Market Update with the Hon. Kinga Surma, Minister of Infrastructure