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34 www.canadianlawyermag.com FEATURE INFRASTRUCTURE Investors remain cautious amid supply chain challenges, market volatility, and ongoing concerns around risk allocation WHILE THE construction market remains strong across Canada, investors are exercising caution due to pressure and market fluctu- ations caused by inflation and high interest rates. Like many industries, the infrastructure market also suffers from supply chain chal- lenges and volatility in the post-pandemic era. " The construction industry is very buoyant," says Andrew Wallace, general counsel at Alberta-based PCL Constructors Inc. "I don't think there is a location in Canada that you would describe as slow." However, inflation is putting tremendous pressure on the industry as construction companies struggle to meet the budgets of their private clients while also managing risk and finding solutions to enable projects to go ahead in the current volatile landscape. "The biggest challenge right now is how to manage overall escalation and vola- tility risk, either on the public side or on the private side," says Wallace. In addition to the impacts of the pandemic, Wallace cites factors including the floods in BC that New challenges emerge for infrastructure sector "We're seeing infrastructure investors hesitant to commit new funds in this current market" Vernita Tsang, Fengate Asset Management disrupted transportation networks, global shipping demand problems, and the supply chain network, all of which created an envi- ronment of volatility. "We are really looking at our industry through the lens of volatility that we've expe- rienced over the past few years and trying to create the most appropriate model to suit the client's needs, cost-wise and risk transfer-wise," says Wallace. A wide variety of contract models have emerged, offering alternatives to the tradi- tional public-private partnership model, which presents further challenges for contractors. "Now we are seeing some projects done by different models; more collaborative models using contract and pricing strate- gies, so there is less emphasis on fixed price," says Marianne Smith, a partner at Blake, Cassels & Graydon LLP. "This has made it really challenging because a number of these models are in a test or pilot phase." These new models lack the mature contract templates of the P3 model, and risk alloca-