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Speakers share outlook of industry at Toronto Construction Association event

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by Vince Versace

Four industry leaders conducted a SWOT (strengths, weaknesses, opportunities and threats) of the Canadian construction industry at a recent panel discussion, moderated by the president of the Toronto Construction Association. They commented on the wind-down of the federal stimulus program, building information modeling, standardized contract templates and changes to the Construction Lien Act.

Construction’s versatility during the recent recession was a key to its strong performance but further adaptability is still required, according to an expert panel organized by the Toronto Construction Association.

“The resilience and flexibility (construction firms) effectively forced themselves to have will position them really well to respond to the opportunities,” said Jeff Murva of commercial real estate firm CBRE.

“Moving forward, while the public sector begins to reduce its investment and stimulus, the questions will be where and when the private sector steps up. I believe those firms with that versatility will be able to respond better to opportunities when they occur.”

Murva was joined by Howard Krupat of Heenan Blaikie, Paul Westbrook of Hanscomb Ltd. and Mark Casaletto of Reed Construction Data on a panel moderated by John Mollenhauer, president of TCA, which conducted a SWOT (strength, weaknesses, opportunities and threats) analysis of the construction industry.

“We probably have the best human resources capability to go forward. The last few years of the recession have shaken out some of the weaker players and we have cadre of strong firms ready to proceed with the human resources to do the work,” added Westbrook. “The firms that are moving forward are moving forward without a lot of risk on their books.”

The development of new standard form contracts is also a strength for the industry to build on, said Krupat.

“This year has seen the release of the CCDC Document 5A and B of construction management agreements that give a lot more flexibility to parties in circumstances where you want to start off in a construction-management scenario and move to a more traditional stipulated price contract,” Krupat explained.

“There is more recognition in the standard form contracts in terms of the uncertainty that has to be managed.”

An area of weakness the panel discussed is the industry’s difficulties in picking up on new technologies, especially in document management and design.

“Primarily the technologies that need to be in place to keep us strong and competitive are in the IT realm,” said Westbrook.

“There’s a growing gap in productivity between the construction market and other sectors of the economy.”

Building Information Modeling (BIM) is one new technology that is attracting attention as to how it will be used in construction.

“BIM is something that will inevitably find its place in the construction and design industry. We have to sift through the legal ramifications of it,” said Casaletto.

“This industry is very risk- and change-averse. BIM is a significant change on how we design, build and bring teams together.”

Areas of opportunity include potential Construction Lien Act reforms after this October’s provincial election, said Krupat. Murva found that smaller construction firms are becoming comfortable with infrastructure project arrangements and are finding the ability to partner and create alliances to participate and deliver such projects.

A threat facing the industry is the public sector trying to make its reduced spending go further, said Westbrook.

“For example Public Works (and Government Services Canada) in Ottawa is looking at different kinds of procurement techniques as ways of saving money, such as construction management, which the public sector has tended to shy away from because of the cost uncertainty and risk.

“They think it will help them avoid scheduling risk, which translates into escalation risk.”

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