From Bids to Bricks: Traditional and alternative project delivery models

JESSICA FOSTER: Welcome, everyone, to all of you joining us online. It's the top of the hour, so we are going to get started. So on behalf of myself, I'm Jessica Foster from Gowling WLG and my co-chair Kyle David from AON. We want to extend a warm welcome to all of you joining us today online for session one of our second annual series From Bids to Bricks.

First and most importantly, thank you so much for making time in your busy schedules to join us. Your support and engagement with this series are what's made it possible for us to now be running this again for the second time. And we truly appreciate it.

KYLE DAVID: Thanks, Jessica, I echo those thanks and want to give a special shout out to the owners, contractors, designers, insurers, brokers, and lawyers who make up this 200-plus attendance. Your collective experience spans the entire construction lifecycle, making this series the perfect forum for candid dialogue about the risks, rewards, realities of getting projects from concept to completion.

JESSICA FOSTER: All right, a few quick housekeeping items. Of course, we can't escape it before we get started. So everyone's microphones are muted, cameras turned off. Just as an FYI, this session is being recorded and the recording will be shared after the webinar with all of you.

You can ask questions by clicking the Q&A icon at the bottom of your window. So please, at any time, feel free to send those questions in. And then Lindsay and I will be tackling those at the end of the presentation. And again, thank you for joining us.

And it wouldn't be complete without of course, our legal disclaimer. So of course, we are not giving legal advice in this presentation. But if you do have any specific legal issues or concerns, please don't hesitate to reach out to one of the Gowling team or of course, the AON team-- and we'll be happy to assist you.

So before we dive in, we just wanted to give you a quick background on what led to the development of this series, and also an overview of what's coming up over the next six and including today, seven sessions.

So both Kyle and I have spent many years in our respective professions, him in insurance, myself in law. And we've worked with a wide range of clients in this infrastructure and construction space. And over time, we both noticed a reoccurring theme, and that is that legal and insurance issues are often deeply intertwined. And oftentimes, our clients will look to us for guidance that crosses over into the other's area of expertise.

So my clients will say, hey Jess, what should my builder's risk limit be on this project? And I'll say, you need to talk to your insurance advisor and someone like Kyle. So that's why we decided to join forces and create this series.

We wanted to offer a very holistic and coordinated approach to both legal and insurance perspectives. And it's intended to be really practical in nature and also integrated over the seven sessions. So they've been designed to build on each other. And that's why we're also going to have the recordings available after each session. So if you or a colleague perhaps couldn't attend one of the sessions and wishes to catch up, that is always an option.

So as I mentioned, today is just the first session. We're going to be talking about project delivery models today, but then that's going to build, as you can see on the slide, what we have coming up in front of us. We have insurance focused sessions. We have a session focused on procurement, contract management.

And then you'll notice that session in September that is more legal focused. It's going to focus on leans and the provincial lean legislation in each province. But we've taken a more national viewpoint this year. So we're not only going to cover Ontario's Construction Act, but we're also drawing on Gowlings national expertise and going to offer insights about how the Lien Legislation and other jurisdictions, specifically Alberta and BC, differs from our Ontario Construction Act.

And last but certainly not least, you'll see in December there we are going to have a session that is focused around artificial intelligence and for all the lawyers in attendance, happy to report that will ensure that that provides at least an hour of your continuing professional development professionalism content, so be sure to tune in.

KYLE DAVID: Today's session is titled Built for Success Traditional and Alternative Project Delivery Models. Over the next hour and a half, we'll unpack delivery methods and traditional design bid build to progressive design build and everything in between. Then layer on the insurance strategies to keep those models upright when the unexpected occurs.

And because the unexpected can also include a conflict with the next site meeting or the impromptu client call, we are recording each session, as Jessica mentioned. If you miss anything today or want to replay a particularly relevant portion for yourself, you will find the recordings and materials posted on our event portal within about a week after each of the sessions.

Feel free to share the link with your colleagues who could not be here. And registration is always open for the following sessions for anyone you think should or would be interested in the content that we're sharing. So please mark your calendars and join us for the entire series.

JESSICA FOSTER: All right. And before we get into the meat and potatoes today, just the last thing I'll mention. Today's conversation doesn't need to end when the microphones turn off. So if you do have any follow-up questions, please don't hesitate to reach out. As I said, we genuinely enjoy this dialogue and we find we learn as much from you as hopefully you do from us.

And on that note, you will all be receiving a very short feedback survey after the session today. So please, please, please just take a couple minutes and fill this out because we really want to make sure that going forward, especially over the next six sessions of this series, that we're providing you with the content that is really practical that you need in your day to day.

KYLE DAVID: With that, thank you again for your time, attention, and enthusiasm. And we look forward to an engaging session and series. And with that, we'll kick things off.

JESSICA FOSTER: All right, so let's get started. I am thrilled to introduce my co-presenter today, Lindsay Wong. Lindsay is a Toronto based lawyer here at Gowlings who advises on infrastructure and public private partnerships, or P3s as we know them, and also construction law.

She regularly advises her clients on challenging and complex infrastructure and P3 projects, and has a strong track record of delivering strategically important and high-value projects across all asset classes and sectors. So we're thrilled to have Lindsay share her expertise with us here today.

Here's a quick outline of what we're going to be discussing. So I'll be starting off. But before that, we have our first audience polling question. So for those of you who may have joined us last year, you might remember we sprinkle a few of these through the session for interest and engagement. And it's also just really valuable for us to get your insights also.

So our first question, how involved are you or your organization in the early stages of project delivery and actually choosing that model? So you should all see a pop-up on your screen right now with some answers, and we'll just give you a minute to fill that out.

All right. I see some results are coming in. OK, so I see that the highest proportion of attendees have noted at 32% that they are consulted for input. So that is quite positive. 25%-- a quarter of you are heavily involved in decision making at this early stage. So I think that's indeed vital as we're going to be talking about.

And then it looks like a collective 43% are informed but not involved or not involved at all. OK, very interesting. So thank you so much for participating. We'll have-- it looks like we got a 70% participation rate, which is great. So I encourage you all to-- we'll have a couple more of these questions coming up. So for now, I'll just close this off and we will get started.

OK, choosing a project delivery model. The project planning phase. This is one of the most important phases of a project. It's where the commercial, the technical, the financial, the operational and even the legal have to all come together to provide input.

And in large owner organizations, there might indeed be completely different teams who oversees each of these functions. And the key is to have those right people at the table providing input so that an optimal decision can be made about your model because this is going to give your project the best chance of success.

And what does success even look like? I mean, I think most owners would say that a successful project for them, in general terms, they want an on-time, on-budget project. That's quality. And I mean, that shouldn't be hard.

But to achieve that, you have to, as an owner, first identify and prioritize your key objectives as well as be really honest with yourself about your own capabilities and constraints. Now, over the next couple of slides, we've set out, and I'll talk about just a non-exhaustive list of some factors that owners may wish to consider. Although some of these, such as pricing such as risk tolerance, are certainly considerations and relevant to into anyone at any level of the construction pyramid.

So what is being built? Are you building a hospital with an emergency function? Are you building a science facility? Are you building a storage warehouse with office space attached or a condo complex? Right at the very outset, you need to identify that.

And then what are your priorities? I mean, most people would probably look at this list function, quality, design, I mean lifecycle, and maintenance of the building. Most people probably say I want it all. And that's fine. But at a certain point, you just have to have top of mind where your priorities lay. And we'll talk about that a little bit more as we get into it.

Innovation and flexibility. As an owner, how much latitude do you want or do you need for this? And then there's a practical element too because at the point you're asking yourself these questions, what percentage complete is your design?

Is it fully complete? Have you not even started it? And you are truly, truly at the outset of planning the project. Because if your design is partially complete or nearing completion, maybe you're thinking you want constructability input or pre-construction services, and all of that is going to impact the contract structure and the delivery model that would be most appropriate for your project.

Pricing. Now this is a big one. What degree of price certainty as an owner do you want or do you need? And when assessing that question, you're probably going to have to look at how are you paying the contractor and the designer. Where is your funding for this project coming from?

Are you getting project financing? Do you have a lender? Is the funding coming from your own balance sheet? Are the taxpayers funding it?

Your ability to absorb unforeseen cost increases in your degree of price certainty as an owner. That's certainly going to be a factor in the delivery model you choose. And we're going to discuss pricing structure specifically. Lindsay will take you through some of those just in a couple minutes.

Schedule. What are your constraints and pressures? How flexible is your schedule? For instance, have you announced to the public, to an entire community with the minister's backing, that your new health care facility is going to be open on X date? If so, you may have likely little flexibility for late delivery in that case. So this is something you need to think about at a high level at least.

Now, this can be where the rubber hits the road. The next one, owner involvement. And this is where, as I said at the outset, as an owner, I think you really need to be honest with yourself about the level of sophistication you have in-house.

And what capacity do you have on a day-to-day basis to be involved in making decisions on this project because certain models, for instance, like the development phase of a progressive design build such as an alliance? Those are going to require a pretty heavy lift from the owner's side.

Another factor-- do you want or can you be managing contractual relationships with numerous parties? Or are you as an owner just looking to have that one party who's accountable to you for design, for construction, maybe even for maintaining the facility, and that's your desired structure? Another factor to consider.

Your stakeholders in the project. Who are they? And to what degree are you constrained by them? Think about your internal approvals and your stage gates. Do you need approvals at particular stages of a project?

Think about also if you have many different stakeholders, are they aligned? Do they all want the same thing? Do they know their roles? These are all critical questions to be thinking about before you actually sign a contract to deliver a project.

Last but not least, certainly risk tolerance. And this also ties back to an extent to the price certainty that I just mentioned on the last slide because, generally, risk equals money. If you want to transfer risk, you're going to pay for that in some fashion. If you choose to retain the risk and keep it, there may be an opportunity for you to save on costs.

So as an owner particularly, what is your attitude towards this? And also keep in mind there's alternative risk transfer products that could help in some of these areas to backstop your risk, such as insurance, which are good friends AON could certainly help with.

So with that, that brings us to our second audience polling question, which you will see pop up on your screen shortly. When selecting a project delivery model, which factor is most important to your organization? And these are the factors that we just spoke about at a high level.

We'll give a couple-- we'll give a minute or so for that. I see some responses coming in. The polls are hot. Thank you everyone for participating. I can see those bars moving.

Hey, we're almost 60% participation. I'm going to let it go for about another 15 seconds. Let's see if we can crack 70 and improve on our first poll.

It looks like we're topping off very close to 70% participation. So I will take it. And thank you all again so much. So perhaps unsurprisingly, the majority 43% of you replied that price certainty is the most important factor when choosing a model or contract form.

I can certainly understand that, although with price certainty, as I discussed, and as we'll touch on further in this session, that may come with a overall price increase reflecting the risk contingency that you are passing over to your counterparty.

27% of you said risk allocation. Again, certainly understandable that is top of mind for not just owners, of course, but pretty much everyone in this construction pyramid. And then we have a sprinkling of responses, 14% on schedule certainty. And then it looks like 10% and 6% on innovation and flexibility.

OK, well, thank you so much again for your participation. Now I am happy to hand it over to my partner, Lindsay Wong, who's going to take you through some pricing structures.

LINDSAY WONG: Great. Thanks, Jessica. So we thought that before we dive into the various contracting models, we would give an overview of the various pricing structures that really do feed into how these models operate and feed also a lot into what Jessica was just talking about, about balancing contingency for risk versus price certainty.

So the first one is the fixed price. This can also be referred to as stipulated price or stipulated sum. And this is really where there is one lump sum price for the entirety of the scope which may be subject to adjustment, but only in to the extent specified in the contract.

This provides the maximum price certainty for the owner. However, it does also come with a cost as there's usually risk contingency agency built in to give that price certainty. So the contractor will assume risk for cost increases in most cases. And so because of that, that is where you're going to have that price cushion that's set in there.

This is most effective for projects that have defined scope and where risks can be identified and quantified. And it's one of the key features of the CCDC2 contract, which we'll be talking about a little bit more later.

The next one is the cost-plus pricing structure. And so this is where the contractor would be paid for actual costs plus a fee percentage for some of its services. This provides less or minimal price certainty for the owner, as all of the actual costs are flowed through to the owner. This, however, though, will reduce any contingency. Given that the owner will be responsible for any of the unforeseen costs that come up on the project.

Next is time and materials. And so this is where the owner pays for the actual labor materials, usually with pre agreed to rates for some of the services. This is similar to the cost-plus pricing structure and provides low price certainty for the owner. But again, there will be no pricing contingency built into these costs. This is seen in the CCDC3 contract form, which is the cost-plus contract, which can be adapted for to be on a time and materials basis.

The next pricing structure is unit prices. And I don't often see this as a standalone pricing structure in a contract. This is where there's going to be payment based upon agreed to unit rates for perhaps materials on a ton weighted basis or linear basis, and unit rates for particular labor.

I see this most frequently used for perhaps pricing cash allowances where you might have an otherwise fixed price contract, or perhaps for pricing variations or change orders. Again, in a fixed price contract, you can sometimes see unit prices be brought in to deal with those circumstances. Or for smaller purchase orders from suppliers, you may see unit prices used in the supplier stream.

The next one is caps and GMPs. And this should not be confused with a fixed price contract because the way that a cap would work is you are typically still compensated for based on the actual costs as they are incurred, but that is up to a maximum amount. So the cap will likely include some pricing contingency for the owner to give them that price certainty for what the total upset limit is going to be.

But to the extent that the actual costs are lower than that maximum cap, then the owner would get the benefit of that lower price. We have hybrids listed here. As I mentioned, with the unit prices, we sometimes see contracts bring in different types of payment structures depending on the scope and sub-scope of a contract. So you might see some of these hybrids across the different contracting structure.

And the last is target price. And so the target price is where there's a price. And you see this a lot in the progressives where it's built together with the contractor and the owner. And then to the extent that the actual costs for the project come in lower than the target price, there is a sharing in those savings. And we would call that a gain share.

And then to the extent there are cost overruns where the actual costs come in above that target price, there would also be a sharing of those cost overruns. And we would call that a pain share.

JESSICA FOSTER: Great. Thank you, Lindsay. So we are now-- and I recognize we're a bit heavy on the audience polling at the front of the presentation. But we have a third polling question for you as we kick off into the traditional delivery models. Coming up next, which project delivery model do you most frequently encounter?

OK, we're still getting some activity on the polls. We'll give it maybe 10 or 20 more seconds. The numbers are still rising. All right. And it-- oh. Yeah, OK. It looks like, again, we're just close to 70% which is fantastic. So thank you again.

So the majority of you here responded that design bid build was the model that you most frequently either work with or encounter in your role. And you know what, that's not surprising because I was actually at a CCDC seminar yesterday. And they mentioned to us that DBB is still the most popular delivery model in Canada, as measured by the amount of CCDC2 contract forms that are purchased. So interesting fact.

And the response to this poll seems to confirm that. Coming in second at 17% followed closely at 14%, we have design, build and construction management, respectively. So very interestingly, our top 3 and the vast majority of you have selected traditional delivery models as we've conceptualized them, at least in this presentation, as the top models. We have P3s coming in at 11% and PDBs at 5%.

So with that, we will move along to our traditional models. And this is very fitting because, again, it ties into that last-- the results of that last poll we just looked at quite nicely because, I mean, although we've all heard a lot, I'm sure, about these new sexy alternative delivery models like progressives and alliances and IPDs. And we'll talk about those later in the presentation.

Not to be forgotten or ignored. We have our traditional delivery models, and we're going to start off by discussing a few of them today, namely our DBB, our construction management, and also our design build. And it really is these traditional models that in the view of many, remain the backbone of our market today.

These contracts, especially those on the CCDC based forms, even if they're modified by supplementary conditions, but they remain familiar to the market. There's a clear risk allocation. They typically generate strong competition when these are put out to tender.

And so it's my personal view. These traditional models are not going anywhere. And in fact, we might even based on the look of the pipeline in Ontario, be looking at a little bit of a resurgence in some of these models over the coming years. So very interesting. And with that, I'll turn it back to Lindsay.

LINDSAY WONG: Great. Thank you. Perhaps before we dive into the model, we'll talk a bit about some of the acronyms that we've already been using. And so the first would be CCDC. And so this stands for the Canadian Construction Documents Committee, which is a national committee comprised of representatives from the industry-- owners, design professionals, contractors. And the CCDC committee is who produces a lot of these commonly used forms of contract.

We also have the Canadian Construction Association, which is referred to in some of these slides as CCA. And this is a national association of construction industry participants. And they also have their forms of contracts, which are often used for some of the downstream contracts, including the subcontracts.

The Royal Architectural Institute of Canada, RAIC, is a national organization that represents architects and advocates for them in Canada. And they also produce some of their standard form contracts. So you'll see some references to those in these upcoming slides.

And lastly is the Ontario Association of Architects, which is a regulatory body for architects in Ontario. And again, publishes standard form contracts to be consistent with Ontario law. So again, you might see some references to OAA in these upcoming slides.

So with that, I'll start with this overview of the Design-Bid-Build, which does appear to be our most popular model right now in the industry. So here, you're going to see that the owner enters into two key contracts. And the first is for the design and architect.

And they are onboarded early on the project to development-- to develop the design that the owner will ultimately take to a procurement in order to enter into a construction contract with the general contractor.

So the owner is between, I guess you could say the designers and the construction contract. And so while they enter into a CCDC2 document, which is a fixed price contract, as I covered in our pricing models, there is a possibility that the owner may be between for some design issues that they'll look to resolve.

So the owner is responsible for managing these two key contracts. The designer or architect would also stay on and in most cases be the consultant through the administration of the CCDC2 documents. And then the general contractor will then enter into and engage with all of the consultants downstream.

The CCDC2-- again, fixed price. So you have that price certainty for the owner. But the owner also then has significant control over the design because it is directly working with its design consultants to develop the technical drawings and specifications that are ultimately bid to.

Next, we'll flip to some Design-Bid-Build alternatives. And really here, this is again introducing more flexibility for the owner. But with that flexibility comes additional risk.

And this is where the owner-- could be used where the owner wants to engage its own key consultants or perhaps specialized suppliers. And so the owner may enter into additional contracts. And in that case, they may have additional roles in coordinating those-- any risks that come up between those two contracts.

So for example, if they have a large, complex facility and they're looking to do in addition to that facility, they may have systems within their facilities that they want to maintain in this new addition, and in which case they may use their current existing suppliers of specialized equipment so that they can have a fully integrated system.

In that case, if they engage in a separate contract with that supplier, and that supplier perhaps causes any delays to the critical path during the course of construction, the owner may find themselves between that supplier and the general contractor, providing relief to that general contractor for any delays that its own suppliers have caused.

So again, this allows an owner to have additional flexibility, may allow them to procure specialized equipment to their specifications. However, they will with that flexibility also have some additional risk.

Next is construction manager delivery model. And this one, I think, also in the polls was shown to be quite popular. We're going to cover two scenarios. One is the construction manager not at risk and one is the construction manager at risk.

And here, the owner will enter into a direct contract with the design consultants, the architects, and the contractors. But it enters into a separate contract for the construction manager to act really as the owner's agent through the course of the project.

And the construction manager usually comes on quite early in the process because they can help work with the owner and the consultants to develop the design. They can help build budgets for the contract, build pricing schedules, help with coordination, really providing that guidance to the owner throughout the course of the project. And then they stay on during the course of the project to help the owner manage some of its contracts with the trades and subcontractors.

But note that it is not-- the construction manager is not a signatory to any of those contracts, and ultimately the owner will be responsible as the counterparty under any of those agreements. So this is best for accelerated project completion, fast tracking, and involving sophisticated, competent owners with a degree of pricing flexibility.

But the construction manager is going to be paid on a cost-plus fee basis. And again, will not take on any risk for the actual schedule or price certainty with respect to the actual construction of the project.

Next, we're going to look at construction manager at risk. And there's a few different pricing options that applies to this model. So this is similar to a Design-Bid-Build contract in that first there'll be the development of the design. And the construction manager may be performing and is usually performing some pre-construction services during that design development phase.

But then ultimately, the construction manager, once that design is developed, will go out and procure the subcontractors and to that will do the construction for the project. So because-- sorry, the pricing options for the construction manager vary so you can do a fee for their service. And this can also be based on percentages of the actual costs.

Or you can convert this to a fixed price contract, where the construction manager actually takes on the risk for the schedule and price of its subcontracts. So there is that optionality built into the CCDC5 fee that can be utilized to give the owners that price certainty. Alternatively, you could keep it as a cost-plus and pay based on the fee.

So with that, I think I'm going to pass it back to Jessica to go over the design build or EPC contract structure.

JESSICA FOSTER: Great. Thanks, Lindsay. So we are now in the Design-Build and engineering procurement and construction contract family.

So generally speaking in this model, as you can see at the very top of the diagram there, you have a single design builder. And that design builder contracts directly with the owner. An example of that contract is our CCDC based form 14, which I'll also be talking about some recent exciting updates to that that were just made on the next slide.

But that design builder entity contracts directly with the owner, and that design builder is responsible for both the design services and the construction work. And typically, this is done at a predetermined stipulated fixed price.

So the contract clearly defines responsibilities of both parties. And because that design builder is taking on both the design and the construction elements, it promotes a streamlined, integrated approach by design because you have both of those major scopes of work design and construction centralized under one contract, and it's one point of accountability for the owner as well.

It also ensures cost certainty. And with that single point of one accountability for the design builder, that's nice for the owner specifically because you're not going to get that finger pointing between in the event of a dispute, your consultant designer on one hand and then your GC on the other.

So if the owner is kind of in the middle of those other contract structures, some of the ones that Lindsay mentioned, the DB, the CM, if there's a problem, then the situation might happen where you have your consultant pointing at the GC saying that defects not my responsibility. That was your means and methods contractor.

And alternatively, the contractor might then point their finger back at the consultant and say no consultant. This defect is not my responsibility because that was your failure to coordinate the design. But again, the nice thing about this model is because both of those functions are united under this one contract.

As an owner, you just have to make that defect claim or whatever have you that warranty claim against that single entity. And then that design builder carries the risk and sorts it out amongst their own parties downstream. So this model typically works best where, as an owner, your statement of requirements, it's clear, it's stable, and it's capable of being priced upfront.

But on the flip side, you can have a lot of challenges with this model. If as an owner, your statement of requirements is maybe vague or it's incomplete, or if you as an owner want significant input after contract execution because, remember, the CCDC 14 and a lot of these DB and EPC models, they run on a fixed price.

So if you as an owner want to be adding things or making changes after the fact, you may be looking at a significant sum of money in change orders. As well, bidders need sufficient information about the project, about the risks, for instance, about the site conditions to adequately give you that stipulated price up front. So if bidders only have limited information. And that's all you're able to give them, fixed price, as Lindsay said, it might not be the best option.

And you can see here on this slide as well, the subcontract sitting below the CCDC 15, that is typically the base form that would be used if that design builder needs to go and procure an architect or consultant for the project.

Now some large GCs design builders-- they will have this design function in-house. Many do not. So that's where you're going to see the CCDC 15. It's basically a flow down of the obligations in the 14 specifically designed to be paired together.

And then on the other side of our diagram, you can see the subcontract forms, some typical ones that would be used CCA 1s, CCA 19. We won't talk about those in a lot of detail today, but wanted to just bring them to your attention.

So next, now that we know what a design build an EPC is in general terms, I'm going to take you through some of the very exciting and I think beneficial updates that CCDC has made to that 14 form that are coming soon, and I've heard it on good authority that this new 2026 CCDC 14 and their companion CCDC 15 form, as we just discussed, it should be available in around mid June. We're looking at the 15. So keep an eye out for that.

So perhaps the most significant structural change in these 2026 updates is the introduction of ready for takeover as a primary project milestone. And essentially, this is going to replace what was effectively substantial performance from the 2013 CCDC 14 edition.

And indeed, many of you may know and recall that CCDC has made this change and incorporated ready for takeover in some of their other forms as well, namely the 2 and the 5 contracts. But this isn't just a terminology change because essentially substantial performance, which was the previous milestone in the former edition. That is a contractual, that is sorry, a legislative concept.

It's essentially tied to kicking off the clock on that lean period and then the subsequent release of hold back, but some viewed substantial performance as two blunt of an instrument to actually tie to handover of the asset because what owners were finding is, yes, substantial performance had occurred. But I still need some other elements here to actually operate this project.

So that's we're ready for takeover comes in. And this is a contractual concept, and it requires the counterparty, the design builder, to go well beyond substantial performance. So specifically in the space form, there's eight core prerequisites that the design builder would have to meet to obtain achievement of ready for takeover.

And one of those as a condition is substantial performance. So substantial performance would come first. That's one of the core prerequisites. But additionally, things like the design builder completing final cleaning of the facility, delivering operations and maintenance manuals, and making as built drawings available, for instance, and also completing commissioning and start up testing.

So essentially what this does is it aligns this contractual milestone of handover more closely with what the owner actually needs and cares about. The owner doesn't just want to take possession necessarily of a substantially completed structure, for instance, but they want a structure that is genuinely ready to be operated.

Now, the cascading effect of this ready for takeover milestone is also important. And that's the third bullet point I noted here because the warranty period, the indemnification period for claims, the insurance transition, and what I mean from that is the transition from the contractor's builder's risk policy, typically to the owner's property insurance. That is all now triggered and runs from ready for takeover, not substantial performance.

So the way some in the industry are viewing this as it actually means in a sense that the owner gets a bit more time, for instance, if we're thinking about warranty to discover and report those defects or deficiencies arising during early operations because now, instead of the warranty period starting from substantial performance, it's starting from ready for takeover, which happens after substantial performance.

Next change, limitation of liability. A comprehensive regime was introduced in the 14. And again, this is similar to the changes that were for instance brought in the CCDC 5 contracts recently. So the 2013 edition of the CCDC 14, it dealt with liability and the caps on that somewhat indirectly through the indemnification provisions.

But now what's nice is this 2026 form introduces a standalone provision, and it essentially applies to cap. It's a mutual cap-- the liability of either party to the other in relation to this contract under any legal theory. And there's a couple key elements to this, which I've included on the slide. And of course, all of this can be revised and customized through your supplementary conditions.

So first though, cap structure for insured losses, that liability is actually capped at the applicable insurance amount. Now for losses that are uninsured-- and again, this is just the CCDC 14 base form. It's capped at the greater of the contract price or $2 million, but never more than $20 million.

So for your large contracts, specifically those over $20 million, that could be a factor. And you might want to look and determine if that cap is sized appropriately.

There's also now an express exclusion of indirect and consequential damages. And indeed a lot of parties choose to add this anyways by their supplementary conditions. The devil is in the detail though, so of course, you're going to want to make sure to review that and ensure that that's suitable for your project and relationship.

And not to be forgotten. Of course, speaking of the devil being in the detail, there's a detailed list of carve outs to that liability cap. So these carve outs to the cap essentially mean that this liability is uncapped. And I've included some of the categories of uncapped liability below-- willful misconduct, violations of law.

And indeed some of these uncapped liability kind of heads are more typical to see in larger contracts than others. But it does fundamentally change the risk profile of a contract. So of course, you're going to want to look at these and consult with your commercial and legal advisors appropriately.

Next major change-- instruments of service. So this is one that is probably not going to jump out at you from a headline perspective, but it has a practical significance when we're thinking about copyright and intellectual property rights.

So the 2013 equivalent, which I put on the screen, referenced certain heads of deliverables. And it was done in a bit of a limited and disjointed way. You can see 2013 said plans, sketches, drawings, graphic representations and specifications.

Now drawings and specifications-- you can see those are capitalized. It means they are defined terms. So that's positive. But plan, sketches, graphic representations-- those are undefined. It can also be a bit ambiguous.

And more importantly and again, remembering this was from 2013, this language it doesn't clearly capture, for instance, software, other digital deliverables, the use of BIM. And all of these are now central to how our modern projects are typically designed and delivered.

So what CCDC has done is they have introduced a new, broadly defined definition called instruments of service. I do not have this up on the slide because it's quite extensive, but essentially it includes, of course, drawings, plans, models, specifications, reports. But then it also specifies software concepts, processes data, other design related materials.

So essentially, if it is a deliverable prepared by or on behalf of the design builder for the work, it would likely be captured by this instrument of service definition. And notably drawings and specifications which were previously defined terms in the 13 iteration, those have been removed as defined terms because they're now incorporated in this instruments of service definition.

So why do we care about this? Well, we care because the key protective provisions in this contract, like I said, around copyright, intellectual property, permitted use, and then associated indemnities for misuse-- those are all now anchored to this instruments of service definition.

And generally, key principles are generally your ownership. Your copyright is going to remain with the party that prepares them. And again, this is all under the base form. So it can be modified by supplementary conditions.

The owner gets a license to use the instruments of service, but it's very limited. It's only for the same site, the same project. And if the owner wants to use these instruments of service for anything beyond that, they're going to have to negotiate a written license for that.

Now termination situation. What happens there? So essentially the owner under the base form, they're able to take possession and use the instruments of service to complete this specific project. And that assumes the owner has paid the design builder for these deliverables.

But the design builder, the consultant, and the other consultants who were involved in producing these instruments of service, they disclaim all responsibility and liability for such use. So that's instruments of service.

Last, I will talk about on the 14 updates. There have been some insurance updates. So the headline here is the increase in professional liability insurance requirements. So this went from $1 million to $2 million per claim with a-- this went from $1 million per claim and a 2 mil aggregate-- sorry, under the 2013.

And then this was bumped up. And again, we're talking many years later. But 5 million per claim with a 5,000 MIL aggregate under this new 2026 version. Now the tale cover has also been extended, and what I mean from that is, previously, the professional liability insurance had to provide coverage for two years after substantial performance because that was the milestone then. But now it has to provide coverage for three years after ready for takeover.

Now, where the design builder is taking on this design risk and this model, we did feel-- CCDC did feel that this was appropriate to include in the base form. Couple new insurance requirements worth flagging, specifically the requirement for pollution liability, which is required from commencement of the work until a year after ready for takeover.

And then I also wanted to note on the very, very last bullet point their-- contract security provision. So this required bonds, surety bonds under the 2013 edition of this form. This has been removed entirely from the 2026 form.

So if you require bonding on your projects, public owners take note because some public contracts do have require mandatory bonding, performance bonds, labor and material bonds pursuant to Section 85.1 of the Construction Act in Ontario. You're going to need to address these in supplementary conditions.

Very last thing I will mention-- and it's not on the slide. Remember how when I was talking about design build initially, we have the CCDC 14 and then we have the CCDC 15. That's the contract designed to sit underneath it if the design builder needs to retain a consultant.

The CCDC 15 has also undergone a series of updates to essentially align with the updates made in the main 14 form, which I just spoke about. It's pretty straightforward, so I'm not going to go into detail, but wanted you to be aware of it.

And that's it for design build for now. So over to my colleague, Lindsay, who's going to kick us off with alternative delivery models.

LINDSAY WONG: Great. So next we're going to jump into the various alternative delivery models, including public-private partnerships or P3 progressive projects. Some of the new CCDC progressive models, as well as a brief overview of the IPD and alliance models.

So jumping in to public-private partnerships. The P3 contracting model initially emerged in Canada in the 1990s as an alternative to traditional delivery models that we just spoke about, with the goal of enabling public authorities to deliver large-scale infrastructure projects more cost effectively and without requiring significant upfront capital investments.

One of the key advantages of the traditional P3 models was their ability to achieve both price certainty and schedule certainty. As a result of the fixed price and schedule features of the contract model, they're most effective where projects have clearly defined objectives or scopes, and where associated risks are reasonably known and quantifiable.

The allocation of risk in P3 contracting model is key to maximizing the value for money that the model seeks to provide. Specifically, the guiding principle underpinning the P3 model is that risks shall be managed by the party best able or allocated to the party best able to manage those risks.

Another defining feature of the P3 model is the use of private sector financing. So the SPV or project co entity that is engaged in this project is to arrange financing for the cost of construction. And this is because, again, to motivate that on time, on budget objective, the authority often does not pay for any of the construction costs until the project is substantially complete.

Design and construction durations are complex on these high value P3 projects and can span multiple years, so costs end up forming-- financing costs end up forming a material cost for this project. However, the benefit of that cost is-- at least the intent of the benefit of those financing costs is that you get some lender involvement and oversight in the project.

There are different types of P3 models. These could be Design-Build-Finance-Maintain, which is shown on the slide that just popped up. There's also variants such as Design-Build-Finance-Operate-Maintain with specific concession requirements, Design-Build-Finance without that maintenance period. And in Ontario, we used to see quite a bit the build finance model as well.

So for purposes of today's overview of what the P3 model entails, we'll look at the Design-Build-Finance-Maintain model, which again, as I mentioned is shown on this image that's now on your screen.

And so here, you can see the authority. And this could be any type of governmental authority a municipality, a provincial ministry, a hospital, a transit authority. And they are the entity that wants to deliver this infrastructure project. And so they need funding. So sometimes you'll see a government or ministry is committing the financing or funding for the project.

And then that public authority will enter into what we would call the project agreement with a special purpose entity, which we call Project Co. The Project Co entity often in a DBFM will have equity investment. They will be also responsible for arranging that private sector financing and for subcontracting all design, construction, operation, and maintenance services that are required for the project.

In Canada, the most common service period was approximately 30 years. We've seen some projects that have 20-year operation and maintenance period. So these are long, long projects and they're very complex.

The Lenders seek protection. And in a DBFM, they're often providing short-term construction financing somewhere in the range of 50% 60% of the capital costs are financed through the construction period. And then you'll have a portion of those, the capital costs that are actually financed through long term, often bond financing.

So the lenders are motivated to be repaid. And the best way to do that, again, is for the project to be completed on time. And so the lenders then, as a result of their interest in the project, will have direct agreements with all of the key parties, including the authority as well as the subcontracts. And this allows the lenders to step in and cure defaults in the event the special purpose entity defaults, something goes wrong.

So before, for example, the authority can terminate the project agreement, the lenders will have the ability to step in and correct any default that might have occurred at the project level. They will also be able to step in then and over-- and overtake the contracts with the subcontractors.

The design builder is responsible for all design and construction. Really everything up until the substantial completion of the project and then the correction of defects that might come after substantial completion, and then the FM contractor or service provider is responsible for all ongoing operations, maintenance, and lifecycle, as well as the hand back at the end of the 30-year period.

It's important to note there's an interface agreement that is between the Design-Build contractor and FM contractor, and this is sometimes forgotten in this model. But it's a really important document because after substantial completion, the design builder will demobilize leave site, which leaves the FM contractor service provider as the party that is remaining on site to deal with all issues that arise.

And so specifically in the first few years after construction, is where I think you'd probably see the most issues come up. When there is a problem in the facility, the only party on site mobilized is that service provider, and so they're usually required to be the first responder, in which case they will have to do immediate actions to correct whatever issues come up. But they also then need recourse against the construction contractor to the extent those issues are caused by design or construction defect.

That interface agreement also provides the service provider an opportunity to provide inputs on the design, as the design has a significant impact on the ongoing-- cost of ongoing operations, maintenance, as well as the life cycle requirements that might come over-- come up during that long-term period.

So this is-- again, I could do a whole presentation just on P3s. So that's just the intention of a high level overview of the parties involved in some of the key contracts that come up between those parties.

So next, we're going to move into Progressive Design-Build projects. And P3s, they were fixed-- their fixed price and fixed schedule. And I think there was a point in time where the market felt that the pendulum, the risk pendulum had swung too far and with a very robust infrastructure pipeline at all levels of government, fell out of favor with the private sector. And we saw waning competition.

And that's when the Progressive Design-Build and other progressive type projects really started to come into favor because they saw-- the authorities and markets saw the progressive model as a way to perhaps deal with risks in a way that would bring competition back to the market-- competition and interest.

And so what's shown on this screen is a two-contract structure. And I will note that it's not always two contracts that for progressive projects, you can achieve both phases of a progressive project under one contract. But it is broken into two distinct phases. And one is the development phase, and the other one is the implementation or construction phase.

I will also note that what we're showing here is a Progressive Design-Build project, but you can also have a progressive P3 project. It's really the design build or the P3 at the end of the progressive, which talks about the-- which describes the contracting model used during the implementation phase. But it's the progressive part of these projects that make it unique, and that is the introduction of this development phase.

And so for the development phase, the owner or government entity will seek out a development partner to work on the development of design as well as de-risking these projects. And when I say de-risking, it means there's an opportunity to do additional due diligence that might not otherwise be done through the procurement of one of the other contracting models, as well as the development partner might have the opportunity to start certain permitting-- the permitting process with authorities having jurisdiction.

And throughout that development phase, that development partner will be working on in close coordination with the owner, developing the design, getting the owner's feedback on the design and pricing. And there will be certain checkpoints throughout that development phase where the design builder DevCo will submit design submittals and pricing submittals to the owner for review. And the owner can then engage in discussions.

If, for example, that price is over budget, they can engage in discussions for some design efficiencies, de-scoping or perhaps even further design innovation. And it really lets the owner and the DevCo develop that design. Or if there's significant contingencies, figure out why and what's resulting in those contingencies.

And if there may be an opportunity to reduce those through either further due diligence, advancing even further, some permits. And again, getting to a solution for the project that works both for the DevCo and the owner or government authority.

At the conclusion of the development phase-- and again, this happens whether or not the development phase is part of a broader contract or part of its own development phase agreement, there's usually a project proposal that's submitted. And that is the final design that is to be done under the development phase. It could be 50%, 75% as well as the final pricing proposal. And we refer to that often as a project proposal.

And then the government authority or owner can take that back and consider whether they want to move forward with that DevCo as the construction contractor or design builder under the ultimate implementation phase or project agreement that's entered into.

The owner also often has the opportunity to off ramp after the project proposal phase. So if the final project comes in over budget, the owner does not have to move forward with that development partner into the implementation phase. They also might have some rights to either have the design completed or take that design and procure competitively that design for the implementation of the project.

So that is progressive. And so a progressive P3, again, it's that development phase that's tagged on before you actually enter into that P3 contract. But again, it's working with a partner to advance the design and address some of the risk contingencies that might otherwise make a P3 model or another contracting model cost prohibitive.

So with that, I'm going to pass it over to Jessica because the CCDC Committee has come out with some new standard form contracts to also introduce progressive models within their suite. So I'll let Jessica go over what's new there.

JESSICA FOSTER: Thanks, Lindsay. So as Lindsay said, CCDC very exciting has or will be very shortly coming up with the 32, which is their form of Progressive Design-Build. And as Lindsay mentioned, we have seen it done under a two-contract structure. It can also be done under a one-contract structure. Both of these phases that Lindsay spoke about, and indeed that is the approach that CCDC chose to take in creating this form.

So essentially-- again, and some of this mirrors conceptually what Lindsay just spoke about, but CCDC has conceptualized it as two-phase model. Just like Lindsay was saying, you have your project development phase, and that's essentially phase I. It's your collaborative design, your pre-construction period during which your design builder is going to work with the owner to develop design, refine the scope of the project, develop cost estimates, flush out the risk register, et cetera.

Now, in this project development phase, you have these specific project gates, which are baked into the CCDC 32 form. These are formal checkpoints at which that design builder because, again, ultimately under this form at least, you're going to end up at a Design-Build contract.

That's if all goes well and you enter into the design construction phase, you have a fixed price Design-Build contract, which resembles the CCDC 14 that I spoke about in great detail. But before we get there, these project gate-- so the design builder submits proposals at specified intervals for the owner's review and acceptance.

Now CCDC in their form has defined these intervals in these project gates, if you will, at 10% and then 30%, 60%, 90% of design development. And this also corresponds to your class D cost estimate high level all the way through your CB class A cost estimate, which would come in with your 90%. But again, all of this can be easily customized for your specific project and needs.

Now, another thing worth noting. And this-- there's a bullet point on this in the following slides. But I want to refer to it now is essentially as CCDC has done this anytime during this project development phase, and indeed anytime the design builder provides these project gate submissions-- it's essentially a get out of free-- get out of jail free card for both parties.

Either party can terminate and walk away from the project at that time, essentially a termination for convenience. So no one is locked in with any real material consequences during this project development phase, which makes sense because you're still together, working to even define what this project is going to look like and how much it's going to cost.

And for instance, if these cost estimates are far exceeding the owner's budget and there's no way to value engineer that down on scope, then maybe the owner doesn't want to proceed with the project, for instance, or vice versa.

Now, after these gates, you have the final project proposal. And Lindsay spoke about this as well. But it's the culmination of the process. And under the CDC form, it has to include things like all of those completed instruments for service that I spoke about earlier. That concept is also incorporated here in the 32.

It has to include the contract price with detailed breakdowns, project schedule, and also any amendments to the owner's initial statement of requirements. And this proposal is essentially binding for 30 days. So the owner has a defined 30-day window, which they can accept the proposal and transition to that design construction phase, or either reject the proposal and not proceed with the project.

So Lindsay already spoke about a number of the benefits of the progressive style of project. So I won't reiterate those. I will just mention regarding the 32 form, the early work concept is also worth highlighting because, essentially, this allows the owner to authorize its design builder even during the project development phase.

So you're not in design and construction yet, but owner can authorize design builder to commence certain construction activities. So, for example, if any site preparation or servicing needs to be done, any procurement of long lead items owner can authorize design builder to get started on those without waiting for the final project proposal to be accepted.

Another nice thing about this contract form is it does provide flexibility and it allows the parties too by mutual agreement, lock into their fixed price for the design and construction prior to the final project proposal.

So, for instance, if the owner gets a submission at 60% design development in the corresponding costing and thinks, OK, I'm comfortable with that as my fixed stipulated price and I want to move forward on that basis. Then, with the agreement of the design builder, the parties are certainly free to do that.

A couple points here. Risk allocation-- we talked about this in the context of the CCDC 14. It essentially, in material respects mirrors what is happening in that model in that contract form. So again, I won't reiterate.

Termination. I already touched on this. Either party can terminate during that project development phase. Owner can also terminate for cause in both phases. And design builder can also terminate for owner default insolvency.

Payment. I already spoke about this design construction phase. Essentially, you're working towards a DB contract that's going to be stipulated price as CCDC conceptualizes it.

But that project development phase where all of that collaboration and the design iteration costing development is happening, that can be done either on a stipulated fee basis, a time-based fee or some other method. So you really have a lot of flexibility there to customize what might work best for your particular situation.

I'll also mention the CCDC 33. And essentially, this is the CCDC form that's designed to sit right underneath the 32, which we just spoke about. And this would be the contract in the progressive design build that the design builder would use to procure and enter into with its consultant.

So again, why I bring this up is because it mirrors the CCDC 32-- those project gates. And it all follows along with the phases, the project gates. So if you're considering using the 32, the 33 is just nice because it is designed for it and has a lot of the machinery already built in. And this is also brand new.

So that wraps up our progressive section. We are now going to get into Integrated Project Delivery and Alliance. So in recent years, in Ontario, we've seen, as we've discussed a shift a bit more towards these collaborative outcome driven models. IPD and Alliance, of course, fall in that basket, as do the progressives, which we spoke about.

In Canada. We have seen to-- we've seen more IPD contracts. They've been a bit more popular than Alliance other than NBC, where they do a few more Alliance projects. But in Ontario, I believe we've only seen a couple Alliance projects thus far.

So essentially, I've decided to approach the IPD and the Alliance together because they do share a number of basic principles in philosophy, which I've set out on this screen. So essentially, both models, they use this collaborative multi-party framework with an emphasis on early engagement.

So they essentially unite the owner, the consultant, the contractor, potentially other key subcontractors and suppliers, often under one contract, but not always-- often using one contract at the very earliest stages of the project before the design work has even started.

So this just essentially solidifies that integrated nature of the model, because these parties, which would typically be separate and opposed, they'd be owner and contractor, for example, counterparties to each other and looking to allocate risk between them.

They're now all under this one contract but as a single team that functions as a unified entity. So it fundamentally just shifts the project team's mindset in the project's focus from individual or organization interest to collective best for project interests.

Shared financial risk reward tied to project outcomes. So essentially, all participants are sharing in the project's overall financial outcome in one way or another. The payment mechanisms may very well be different between these two models. But typically, you're looking at some sort of cost plus target price.

So to the extent that the total cost of the project come in over that target price, there will be a profit sharing to the extent that the project costs come in under that target price. There will be some sort of sharing in that pain, if you will, or those losses.

But what's consistent is typically the maximum that the non-owner participants stand to lose. The maximum at risk typically is profit. So it makes these models appealing because contractors know that at a very minimum, they're going to get reimbursed for their actual cost, labor their materials that they can justify and support that they've incurred on the project.

Decision making and governance. IPD-Alliance. They have different terminology for how they refer to this, but what's consistent is essentially unanimous decision making is required at the highest level. And this means that any party can effectively exercise a veto right by withholding their agreement. And again, it's a mechanism that forces all of these parties, this unified team to work together to find a solution that's truly best for project.

Transparency, open-book accounting. All of these parties are functioning as the same entity under the same contract. So they all have similar access to information, requires open-book communication, open communication, and access to financial information.

Some key differences. So I mean, one is the contract form as I'm going to discuss over the next few minutes to end out the presentation. CCDC does have an IPD contract form. It's the CCDC 30 that was recently updated last year in 2025.

By contrast, the Alliance projects we've seen thus far, they're typically bespoke contracts. So for that reason, too, it's difficult to speak in a lot of detail about the similarities and differences.

Approach to claims. The principle is similar, but the architecture from what we've seen in getting there is different. In the CCDC 30, there's a waiver of claims that the parties give with defined carve outs. In the Alliance forms, we've seen there's very much a no-blame, no-claim culture. And then there's proportional liability sharing among those non-owner participants. So same principle, different architecture to get there.

Last application to projects. We've seen the IPD have a pretty significant uptake in Ontario in the municipal and institutional building sectors. By contrast, the alliances we've seen typically used on major transit projects, for instance. So we'll have to see, of course, how that plays out over time. That's just very much a point in time reference of what we've seen so far.

And again, as promised, your CCDC 30, I've noted some key features. This was updated just last year to incorporate feedback from the market. It has your validation phase, your project execution phase, and in that manner, the validation phase-- it almost very much resembles the progressive phase in terms of the PDBs and the progressive P3s that Lindsay and I spoke about earlier.

So I won't go into that in too much detail. But a main mechanism here on the financial side is the profit pool. So this is very central to IPDs shared risk, shared reward structure.

So it's essentially a single pool that absorbs cost overruns until it's depleted, at which point the owner bears remaining costs on an actual cost basis. So it's all parties are putting money or putting their profit essentially at risk through that pool. And they all stand to benefit to a certain degree if there's profit remaining.

Other key features of the 30-- mandatory lean practices in use of the big room. And the big room is meant to be a central physical workspace where all the IPD members are present. Intended to help maximize collaboration.

There is options to incorporate added value incentive items. It's essentially a wish list of enhancements that fall outside the initial project budget. But if they are added to the project, then it actually increases the profit pool as well.

So what it essentially does is it can incentivize the team to find efficiencies and innovate throughout both phases of the contract, even in that latter phase as well.

Ready-for-takeover. This has also been updated in alignment with the other CCDC forms to replace substantial performance. And then, of course, the form contemplates an optional IPD advisor to provide guidance on IPD principles and lean facilitation. So that in a nutshell, is your IPD and your CCDC 30 form.

Before we have a couple of minutes for questions-- and I've seen one come in online that I can address. But before that, we'll just do our very last audience polling question, and we'll see how many of you are still with us. So which alternative project delivery models are you most interested in learning about or considering for future projects? So we'll see if we can get close to our 70% again.

OK, I see lots of participation. That means you all hung on till the end. OK, I'll just give it a few more seconds. Still seeing some activity here.

And this is great. We've almost-- we've pretty much matched our participation percentage from earlier in the presentation. So thank you so much. It looks like the majority of you, almost 40% have said that you are most interested in or considering Progressive Design-Build for future projects.

No surprise there. We're definitely seeing an uptick in all progressive-related models. It has a lot of benefits, as Lindsay and I spoke about for collaboration and early involvement. So that's great coming in.

And you know what, there's almost a three-way tie after that. So we have P3s at 15%, IPD at 16%, and Alliance at 13%. And it looks like progressive P3 specifically are at 3% there. So thank you so much for your participation in that.

We do have some time for questions now, and I see one from earlier on in the presentation that I can answer. So the question was prior to EPC-- so this is going back to when I was discussing Design-Builds and Engineering Procurement and Construction contracts. The question is, can we treat ECI-- Early Contractor Involvement-- as part of our typical models, or should this be treated as a separate project delivery model?

I think I've interpreted that question correctly. I hope I have. So from my perspective, I wouldn't necessarily classify ECI, or Early Contractor Involvement, as a standalone delivery model like Design-Build or EPC.

I think it's better understood as almost a frontend approach, a collaborative approach that allows the contractor to involve themselves early, perhaps when the design is being developed. And that will enhance your follow on EPC or Design-Build, much like a Progressive Design-Build that we spoke about earlier.

Because my understanding is that ECI typically does essentially just lead into your EPC or your DB anyways, so very similar to, in my view, the Progressive Design-Builds that we're seeing much more of today. So thank you for that question.

And I see we have another OK I see we have some questions coming in, which is great. So I can take this last one. Is there an estimated timeline for CCDC 32 to be released? So yes, the 32 as well as the updates to CCDC 14 and 15. My understanding is that they will be broadly available in mid June of 2026. So coming shortly. And then Lindsay, I see another question here.

LINDSAY WONG: Happy to-- yeah, I'm happy to address that one. So that's about with respect to the Progressive Design-Build, do major trades such as mechanical and electrical get engaged early contractor involvement during the development phase? And if so, what type of pricing models are common? Also, is it common for the major trades, if involved during the development phase, to move directly into the construction implementation?

So I can address this. And what I see most commonly is yes, we want like-- they're wanted at the table during the development phase, especially the mechanical and electrical. When you're dealing with a vertical build or facility, they form such a key component of the success of the facility that we do want them identified.

I actually think, though, that there's a challenge in the mechanical and electrical field is that we don't actually have a lot of major mechanical and electrical subcontractors in the market in Ontario. So I often see these sub-trades being identified just before the contract signed. So they're not necessarily needed at the time you're submitting a proposal.

But by the time we're going to sit down and start the design, they are engaged and they're usually identified as a key subcontractor that the authority would want to keep involved in the project, both through that development phase and as well through-- they are often-- if they're providing that sort of input on design and constructability feedback, they are often the ones that are carried through, provided that the DevCo is carried through to that implementation phase. Like we wouldn't normally see a switch to a new subcontractor from the development phase to the implementation phase.

And just on ECI, one other point I'll add is the construction management traditional model is a really good opportunity to utilize ECI. You could give that-- construct that scope to your construction manager, where you can have them responsible for providing constructability input on your designs as well.

So it is a beneficial tool, the use of ECI to get that constructability feedback and perhaps even help manage costs. So to the extent that there's certain designs being put forward, while innovative might result in increased construction costs. You can get that feedback right away that can help manage construction budgets, as well as constructability issues.

JESSICA FOSTER: All right. I'm not seeing any more questions. Oh, OK. Just as I said that I saw one pop up. Is Progressive Design-Build a good option for projects with budgets between 5 million to 20 million?

LINDSAY WONG: Yeah, it's an interesting question because I think the progressive it's more about risk than I think budgets. And so I think where a project warrants significant due diligence in order to be able to arrive at a price. I think that progressive phase can be beneficial.

That said, it's most common on larger, complex projects where we would see that because there is substantial cost to that development phase. And there is significant resources required on both the DevCo side and the owner side to implement these progressive projects.

JESSICA FOSTER: Yeah, and I like though what CCDC has done by releasing a standard contract form for the PDB now because I do believe that it can help mitigate some of those just kind of costs in getting started on a model like this, and it provides a really neat framework that can be implemented and even just minimally customized on projects that may be a bit lower value in nature, but where it can still allow you to have those really good benefits during that progressive phase.

So I would say, yeah, it depends, but I think the CCDC form now is a really good option to use. It's baked. It's right there. And that could be a good option for those lower-value projects.

Another question. Do you see hesitation from public owners who have issued PDB contracts accepting ECI during development phase and then moving into implementation with the same ECI trades, i.e., procurement, fairness, open market pricing--

LINDSAY WONG: Yes, absolutely. So if the ECI is provided as a consultant to the owner before its competitively procuring the project, there would be a fairness issue, in my view, because that consultant would then have access to information that would give it an unfair advantage to other people or other potential bidders on the project.

So I do see that as a challenge. But that's where the progressive model is helpful because the idea there is that you're going to go with your DevCo into your implementation phase. I don't think the ideal scenario for any public authority is that you would end up procuring the project.

I think everybody's hoping for a successful development phase that results in a project proposal that's beneficial for everyone, but there would certainly be fairness concerns to the extent you had a contractor on as an ECI, providing that constructability advice and then going to an open market that you would likely see them in Ontario, we'd call that an ineligible person. They would likely be listed there.

JESSICA FOSTER: All right. And with that, I recognize for a couple minutes over time. I don't see any other questions. Thank you all so, so much for your participation today. Your audience pulling your great questions. And like I said at the outset, just for making the time to be here with us.

So we really, really do appreciate that. And certainly for any-- if anything else comes to mind, do you have any other questions, please don't hesitate to reach out to either myself or Kyle directly. And certainly, I can put you in touch with Lindsay as well. So thank you again. Kyle, any last closing remarks.

KYLE DAVID: Nothing for me. Thank you very much.

JESSICA FOSTER: OK. Thanks, everyone.