On-Site Magazine February 2012

February 2012

BANKING ON CONTRACTORS

MOBI LE MA PPING

pg.37

Evolution in project financing is pushing contractors into the spotlight pg.24

GETTIN’ GOOD

GRADES pg.18

HOT-ON-HOT pg.30

Avoid

IP OWNERSHIP SURPRISES pg.46

+

MANAGE RISK

THE DESIGN PROCUREMENT STRATEGY pg.42 www.on-sitemag.com

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PM #40069240

12-02-07 11:58 AM

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*For commercial use only. Customer participation subject to credit qualification and approval by CNH Capital America LLC or CNH Capital Canada Ltd. See your Case dealer for details and eligibility requirements. Down payment is required. Offer good through March 31, 2012. Not all customers or applicants may qualify for this rate or term. CNH Capital America LLC or CNH Canada Ltd. standard terms and conditions will apply. This transaction will be unconditionally interest free. Canadian Example: The interest rate will be 0.00% per annum for 42 months. Based on a retail contract date of January 1, 2012, with a suggested retail price on a new Case 580N of C$85,000.00, customer provides down payment of C$8,500.00 and finances the balance of C$76,500.00 at 0.00% per annum for 42 months. There will be 42 equal monthly installment payments of C$1,822.00 each. The total amount payable will be C$85,000.00, which includes finance charges of $0.00.

This offer may not represent actual sales price. Taxes, freight, set-up, delivery, additional options or attachments not included in suggested retail price. Offer subject to change or cancellation without notice. ©2012 CNH America LLC. All rights reserved. Case is a registered trademark of CNH America LLC. www.casece.com

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VOLUME 56, NO.1 / February 2012

cover story 24 Banking on contractors Evolution in project financing is pushing contractors into the spotlight

Departments 5 Comment Social media: what’s it good for?

8

18

News Industry news

10 Calendar Upcoming industry events

16 Construction Statistics

42

The latest news on building permits and construction employment

13 Test Drive Doosan in Tuscan

COLUMNS 42 Risk The design of procurement strategy

37

44 Funny Photo Funny Photo contest

46 Contractors and the Law Avoiding IP ownership surprises

41

Index of Advertisers

features 18 Gettin’ good grades

30

Paving a path to the future

37 Mobile mapping saves money

Buying the right motor grader for the job means buying new equipment less often.

Ministry of Transportation of Ontario (MTO) paves its way into North America’s history books, by testing hot-on-hot asphalt technology.

Contractors are using mobile mapping to increase efficiencies and reduce costs in a variety of highway, urban street, railway and pipeline projects.

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11150_FTVOC 5466 Dump Ad On-Site Mag.indd Tuesday, May 10, 2011 9:43:53 AM

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COMMENT

Social networking: What’s it good for?

I

Follow us on Twitter @OnSiteMag

t’s official, social media is giving me attention deficit disorder (ADD).

Seriously, before Twitter, Facebook and LinkedIn, I was already struggling to keep up with a constant barrage of email, phone messages and snail-mail. Now, although I’m suffering fewer paper cuts, I’m frantically “Tweeting”, “Posting” and “Facebooking” instead! My thumbs are sore, and walking into walls has become a routine occurrence.

Is it worth it? Is the construction industry benefiting from social media? Is it necessary?

Where’s the return on investment (ROI)?

On a mission to answer these questions, and figure out what role social media should play in the construction industry, I contacted Christine Zakrajsek, web manager at EllisDon. Zakrajsek not only manages the website, but also heads up the construction giant’s social media efforts as well.

During our phone conversation, she identified three key benefits that EllisDon has experienced as a result of social networking efforts—increased employee engagement, better brand management and network building.

“Facebook generates very low engagement numbers, even for mega brands like McDonald’s, Nike or Starbucks,” explains Zakrajsek. “But for employee engagement it’s great.” EllisDon employees from all over Canada post photos and updates from jobsites across the country on the company’s Facebook page.

Twitter and YouTube is where contractors should invest their time for business-to-business network building. YouTube because they can post videos of the projects and challenges that their companies experience. “These videos show the

people and passion involved in a project. It’s very powerful,” says Zakrajsek.

Then Twitter is key, because that’s how contractors can blast out their messages and get people to see what they’re working on.

LinkedIn is another network that comes up in conversation often. Perceived as more of a human resource tool by the construction industry, contractors really aren’t fully embracing it yet. At present, it’s basically identified as a database of resumes, which is not seen by contractors as the best way to recruit a skilled machine operator.

What about brand management?

Ultimately, people are going to be talking about your company—whether you have a social media strategy or not—but if you do have a presence, that gives you an opportunity to manage your brand’s image. It gives you more control and keeps you in the loop in terms of responding to criticisms, questions and rumours.

The last key benefit that Zakrajsek mentioned is network building. Networking used to be (and still is) conducted in hotel lobbies and on golf courses, but today that has also expanded to include the digital realm. ROI for social media efforts is not quantifiable by dollars, so much as it is by the relationships we develop and the knowledge we gain.

I for one am very pleased to know my ADD has not come without some kind of reward.

Corinne Lynds / Editor CLynds@on-sitemag.com

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CONTRIBUTORS

meet our contributors Jim Barnes / Contributing Editor Past editor of On-Site, Jim has more than 30 years of experience as a business journalist and editor. He regularly writes cover stories and in-depth features on major issues impacting the Canadian construction industry. Read Banking on contractors in this issue on pg. 24.

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

Publisher | Peter Leonard (416) 510-6847 PLeonard@on-sitemag.com Editor/Editorial Director | Corinne Lynds (416) 510-6821 CLynds@on-sitemag.com Assistant Editor | Andrew Snook (416) 442-5600 x3524 ASnook@on-sitemag.com Contributing Editor | James A. Barnes Art Director | Melissa Crook (416) 442-5600 x3260 MCrook@bizinfogroup.ca Associate publisher | David Skene (416) 510-6884 DSkene@on-sitemag.com Account Manager | John Chiasson (416) 510-6791 JChiasson@on-sitemag.com Sales & Marketing Coordinator | Kim Rossiter 416-510-6794 KRossiter@bizinfogroup.ca Production Manager | Karen Samuels 416-510-5190 KSamuels@bizinfogroup.ca

David Bowcott / Senior vicepresident, national director large/ strategic accounts, construction and infrastructure services, Aon The author of On-Site’s Risk column, David uses a variety of risk advisory methodologies to help large construction and infrastructure organizations to achieve optimal risk profiles.

Check out his column: The design procurement strategy on pg. 42.

Christopher Eagles / Partner at Borden Ladner Gervais LLP Author of On-Site’s Contractors & The Law column, Chris practices general commercial law, with an emphasis in the areas of public private partnerships procurement and construction, including drafting, negotiation and review of design-build, construction, consulting, supply and related agreements.

Read Avoid IP ownership surprises on pg. 46.

Circulation Manager | Selina Rahaman (416) 442-5600 x3528 SRahaman@bizinfogroup.ca Published by BIG Magazines LP, a division of Glacier BIG Holdings Company Ltd. 80 Valleybrook Drive, North York, ON M3B 2S9 BIG Magazines LP Executive Publisher | Tim Dimopoulos Vice-President of Canadian Publishing | Alex Papanou President of Business Information Group | Bruce Creighton SUBSCRIPTION RATES Canada $81.00 per year, Outside Canada US$139.00 per year, Single Copy Canada $13.00. On-Site is published 7 times per year except for occasional combined, expanded or premium issues, which count as two subscription issues.

Privacy Notice From time to time we make our subscription list available to select companies and organizations whose product or service may interest you. If you do not wish your contact information to be made available, please contact us via one of the following methods: Phone: 1-800-668-2374 Fax: 416-442-2191 E-mail: jhunter@businessinformationgroup.ca Mail to: Privacy Officer, 80 Valleybrook Drive, North York, ON M3B 2S9 Canadian Publications Mail Agreement No. 40070230 On-Site receives unsolicited materials (including letters to the editor, press releases, promotional items and images) from time to time.

On-Site, its affiliates and assignees may use, reproduce, publish, re-publish, distribute, store and archive such unsolicited submissions in whole or in part in any form or medium whatsoever, without compensation of any sort.

DISCLAIMER This publication is for informational purposes only.

The content and “expert” advice presented are not intended as a substitute for informed professional engineering advice. You should not act on information contained in this publication without seeking specific advice from qualified engineering professionals.

Canadian publications Mail Sales Product Agreement 40069240

David Godkin / Construction writer

Established in 1957, On-Site is published by BIG Magazines LP a division of Glacier BIG Holdings Company Ltd.

An accomplished, David Godkin (formerly writing as David Kosub) has excelled at the highest levels of his profession: senior writer for the Premier of British Columbia; award-winning science and medical writer, with additional writing credits in industry and business. In this issue, David writes: Getting’ good grades on pg. 18

Inc. ISSN: 1910-118X

6 / February 2012

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We acknowledge the financial support of the Government of Canada through the Canada Periodical Fund (CPF) for our publishing activities.

Content copyright ©2011 by BIG Magazines LP, may not be reprinted without permission.

MEMBERS OF

Canadian Association of Equipment Distributors

Canadian Construction Association

12-02-03 3:17 PM

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INDUSTRY NEWS

Construction in Canada: Bright light amid global gloom Diversification and continued strong investment in the transportation, energy, mining and healthcare sectors will help keep construction workloads steady with low escalation in 2012, according to BTY Group’s annual Market Intelligence Report on construction costs across Canada.

“Even with lower than expected growth in the U.S., worries over European bailouts and slower growth in residential construction in most of the country, we expect reasonably healthy levels of activity across Canada,” said Joe Rekab, managing partner at BTY Group. “The story for 2012 is that strong energy, resource and infrastructure investment should balance a cooling housing market in almost every province, with the exception of B.C. and Alberta, both of which will see gains in the housing market over the previous year.”

FACT Oilsands investments of $24 billion in 2011 will fuel Alberta’s industry, and drive Canada’s strongest residential growth.

Ross Monsour, marketing director for the Ready Mixed Concrete Association of Ontario, mixes up a batch of concrete for a crowd at Construct Canada, held from November 30 to December 2 at the Toronto Convention Centre. The demonstration was designed to highlight the difference between a standard slump concrete and how, with a slight adjustment, it can be turned into a high slump concrete with no impact on the product.

• In Ontario, an ambitious horizontal and vertical infrastructure program will lead, but concerns over deficit spending could put some projects on hold.

• Oilsands investments of $24 billion in 2011 will fuel Alberta’s industry, and drive Canada’s strongest residential growth.

• New multibillion-dollar mining projects

MTO earns ECO Award for burning rubber and building cells Ontario’s Ministry of Transportation (MTO) has been awarded two green thumbs up for tearing up the asphalt, burning rubber and building cells.

The MTO was awarded the Environmental Commissioner of Ontario’s (ECO) 2011 Recognition Award for using two environmentally beneficial innovations at a carpool lot in Beamsville, Ont. that created benefits in stormwater management, waste diversion and carpool promotion. The projects were the installation of bioretention cells and the use of rubber-modified asphalt (RMA) in the carpool lot, located at the Queen Elizabeth Way and Ontario Street Interchange.

The MTO used bioretention cells to mimic the natural hydrologic cycle. The cells work as a plant-based filtration device that

and on-going energy, healthcare and transportation projects will keep Quebec busy.

• More than $10 billion in new potash projects will boost construction in Saskatchewan.

• B.C. will see strong residential activity and increased private sector investment in non-residential construction.

captures and evaporates sediments that flow from the carpool’s parking lot.

According to the MTO, the bioretention cells have filtered approximately 4,000 cubic metres of runoff from the Beamsville parking lot, enough to fill two Olympic-sized swimming pools.

By using RMA to pave the Ontario Street parking lot, the MTO diverted approximately four tonnes of rubber tires from landfills.

RMA is composed of ground up rubber tires and conventional hot mix asphalt. The MTO was recognized for helping develop the technology by using it on the Beamsville project.

This is the second consecutive year that the MTO has won the ECO Award.

For a list of past recipients, visit www.eco.on.ca

8 / February 2012

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On-Site

10.01.11

THEY’RE MEN OF FEW WORDS. SO WE VALUE EACH AND EVERY ONE.

Mark Pivetta, Dave DeYoung, and John Gleim. Not exactly the kind of guys who’ll talk your ear off. But they will, however, tell you exactly where they stand — especially when it comes to productivity. Which is why we couldn’t have been more grateful that these contractors (and many more) volunteered so much of their own time to help us design Deere excavators. And why we hung on every word they had to say. From an Interim Tier 4-certied engine that actually helps increase productivity, to a cab with unmatched comfort and visibility, the new G-Series Excavators prove that when it comes to innovation, talk is priceless.

Learn more from your John Deere dealer or our website.

YOU’RE ON.

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INDUSTRY NEWS

Algonquin Centre for Construction Excellence opens in Ottawa The Algonquin Centre for Construction Excellence (ACCE) is ready to build a brighter future for Canada’s skilled trades workers.

Representatives from the college held an official ribbon-cutting ceremony on Friday, Nov. 25, celebrating the 190,000sq-ft. centre of learning.

Officially opened on Aug. 29, the $79-million facility was designed to house 2,500 full-time students and an additional 5,000 part-time students.

“This investment in the Algonquin Centre for Construction Excellence will help us to continue to build on our commitment to train the workforce of tomorrow and provides our students with new ways to learn through living laboratories, interdisciplinary study, and sustainability built directly into the curriculum,” said Algonquin College’s president Robert Gillett.

The “Living Lab” offers 600 new construction trades spaces for construction, design, engineering and skilled trades students.

The green facility is designed to be LEED platinum The Algonquin Centre for Construction certified, and promote collabExcellence (ACCE) orative efforts between various in Ottawa. disciplines, while offering students integrated, crossprogram learning.

Some of the building’s green features include: a stormwater recovery system for flushing toilets, solar panels for heating water, a five-storey living green wall covered with plants, and R50 insulated Courtesy of Algonquin College roof, air conditioning and heating provided by heat pump exposed pile caps and grade beams and technology and a green roof to help offset built-in sensors offering real-time and the sun’s heat. historical building diagnostics displayed on Many of the building and environmental LCD screens. systems were left exposed with viewing The architects were Diamond and windows to provide students with an opSchmitt Architects Inc., and Edward J. Cuportunity to see aspects of how the facility haci and Associates Architect Inc. EllisDon functions. Some of the features include: Corporation was the design-build company. exposed diagonal bracing, intumescent The building was funded through $35 fireproofing, cast-in-place concrete frames, million in investments from federal and page 12

February 23 to 24

March 11 to 16

March 13 to 15

March 20 to 21

March 20 to 22

Atlantic Building Materials Show

CCA’s 94th Annual Conference: The Changing Face of Construction

2012 World of Asphalt Show and Conference

BUILDEX Edmonton

1st Annual Heavy Construction Expo: Building Workforce Excellence

Moncton Coliseum Complex, Moncton, N.B. The Atlantic Building Material Show showcases the latest building and equipment products related to the construction industry. It also offers a look at the latest in water technology, air conditioning and refrigeration, cleaning and maintenance and much more. www.absda.ca

Westin Savannah Harbor Golf Resort & Spa, Savannah, Ga. The Canadian Construction Association’s program will include a keynote speech by CBC’s Peter Mansbridge, as well as 15 business and general interest sessions and a chance to network with other industry professionals. www.cca-acc.com/en/ events/annual-conference

Charlotte Convention Center, Charlotte, N.C. This year’s World of Asphalt Show and Conference will share its venue with the AGG1 Aggregates Forum & Expo and will have more than 300 exhibitors and 6,000 attendees in attendance. There will also be a comprehensive education program. www.worldofasphalt.com

Edmonton EXPO Centre, Edmonton, AB. BUILDEX Edmonton’s tradeshow and conference plays host to more than 150 exhibitors and 2,000 attendees and offers industry professionals a chance to network. The exhibits will showcase new technology and green products, and there will be 50 speakers and more than 30 seminars available. www.buildexedmonton.com

Winnipeg Convention Centre, Winnipeg, MB. The Manitoba Heavy Construction Association’s inaugural Heavy Construction Expo will explore the needs of Manitoba’s heavy construction industry. The Expo will also offer keynote speakers, classroom instruction, hands-on training, panel discussions, interactive workshops and accredited curriculum. www.mhca.mb.ca

For more industry events go to on-sitemag.com

10 / February 2012

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INDUSTRY NEWS

Letters cement to faster, more complete hydration, while retaining the residual mix water for managed autogenous curing.

I read with interest Nate Hendley’s article: “Ahead by a

This is not an exercise in water retention but hydration.

Century” about the concrete that has no name. In 1994-95, I received a NRC grant for the testing of a new admixture

4) Uniquely, PMT utilizes further the Ca(HO)2 residual

called PMT (pozzolanic mix-water treatment). Following

content by an additional pozzolanic reaction to generate

testing by multiple concrete labs, that insisted on testing

additional CSH. The Ca(HO)2 is the trigger for continued

PMT against industry codes not applicable to this tech-

hydration if used. Flyash, or any other solid pozzolan, will

nology, we were introduced to the science of mineralogy.

be better integrated within the hydrating paste. PMT is

The specialists in this field provided data not addressed

the complete catalyst to manage this process better, a very

by just a typical concrete-testing facility and the picture

green concrete.

changed. Meanwhile, we successfully promoted and sold PMT with great results for many high-profile new and restoration concrete projects.

5) Assumption: a mix water content of 0.45 W/c HydroCure: (A) Unused water retention approximately 0.25 W/c (in a free state within the sand). PMT: (B) uses most of

Advances in concrete science are always a good thing,

the mix water within the first few minutes, (B2) efficiently

and I do not dispute what Daniel is forwarding; however,

opening more cement to water contact (B3) producing

here are a few differences with HydroCure and PMT:

vastly more CSH (B4) chemically-locking residual mix water (for autogenous curing and continued CSH devel-

1) The point re HydroCure of water content retention is

opment) within a substantially more dense intermeshed

important to concrete strength. Standard OPC concrete

hydrate matrix. This method of water retention and

uses only a small portion of the designed mix water and

utilization reduces permeability to very low md values

cement. Why retain the mix water artificially (porous

while improving durability.

aggregates) instead of naturally within a prolific dense hydrate formation? Retaining mix water is second to efficient utilization of this essential catalyst for hydration.

Strength is not equivalent to durability. But dense, well hydrated CSH binder, impermeable concrete is (0.2 to 0.4md). PMT is breathable healthy concrete, capable of

2) We do not dispute that porous sand (an old concept)

resisting liquid contaminants.

will work, somewhat. This method does not improve “appreciably” cement hydration. The effective window to

We are gaining support from interesting segments of

efficient cement hydration is closed shortly after batching

the industry and are now at that magical 20-year mark.

(hydrate shelling). This artificially locked free water is

Will we go the way of flyash or the dinosaur? The industry

then slowly released, i.e. physically from inside voids. The

is difficult to navigate, but we have “a remarkable advance

key ingredient (residual unused cement) has barely been

in the science of concrete” in our PMT technology for

hydrated any better and the retained water is equivalent

making really good, durable, green concrete, a quote

to mere internal wet curing.

from one geologist and concrete scientist.

3) Alternatively, PMT’s mix water retention slowly

Best regards.

releasing this is equal to self-curing, reducing early and long-term mix water loss. But self-curing is not equal to substantially improved cement hydration. PMT opens the

John Macdonald Enhance ICD (Canada) Inc.

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INDUSTRY NEWS from page 10 provincial levels of government, as well as $7 million from the Constructing our Future Capital Campaign and $2 million from the City of Ottawa (land donation).

Federal funding was made possible through the Knowledge Infrastructure Program (KIP), while the provincial funds came from the Strategic Skills Training Investment Program.

“Algonquin’s Centre for Construction Excellence has created 778 jobs and is a great example of what we can achieve when we work together,” said Ontario’s Minister of Transportation Bob Chiarelli.

Dundee Kilmer awarded $514M contract for 2015 Pan/Parapan American Games Dundee Kilmer Developments have agreed

on a fixed-price contract with the Province of Ontario worth more than half a billion dollars to design, build and finance the Athletes’ Village development for the Toronto 2015 Pan/Parapan American Games. The $514-million project is expected to create 700 new construction jobs at the development site and create and support 5,200 jobs in total. EllisDon Corporation, Ledcor and Pav Inc. were chosen to construct the new facility, designed by a team of architects, including Kuwabara Payne McKenna Blumberg Architects, architectsAlliance, Daoust LeStage, TEN Arquitectos and MacLennan Jaunkalns Miller Architects. All the new buildings have been designed to obtain LEED Gold standards. Dundee Kilmer Developments committed to developing a variety of projects in time for the Games, including the next

phase of West Don Lands infrastructure, Front Street promenade, the reconstruction of Eastern Avenue and Cherry Street, a new 82,000-sq.-ft. YMCA recreational facility, George Brown College’s first-ever student residence, 787 units of market housing, 253 units of affordable rental housing and more. The provincial government expects to recover $65 million of the initial development costs from future facility operators. In addition to providing a safe and supportive environment for 10,000 Pan and Parapan athletes, coaches and team officials from 41 member nations, the development will be the future site of a sustainable mixeduse riverside community for the West Don Lands area. The 2015 Pan American Games are scheduled to take place from July 10 to 26 and the Parapan American Games August 7 to 14.

12 / February 2012

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12-02-07 12:00 PM

INDUSTRY NEWS

News Briefs

>> Aecon Group Inc. has been given the U.S. nuclear stamp of approval. The construction and infrastructure development company announced that its Cambridge, Ont.-based fabrication facility has been granted nuclear accreditation from the American Society of Mechanical Engineers (ASME). It is the internationally recognized U.S. industry standard in quality assurance for construction, inspection and maintenance of nuclear facilities.

>> The EllisDon Corporation has been awarded $209 million in contracts to extend the life of two heritage buildings in Canada’s capital, the Wellington Building and the former Bank of Montreal Building. The construction giant beat out six other firms to secure a $143-million contract for extensive

work on the Wellington Building. The project is designed to transform the building into parliamentary accommodations, including 69 parliamentary offices and 10 committee rooms. Work on the former Bank of Montreal Building, will include a full rehabilitation at a cost of $66 million. Both projects are to be completed by 2015.

>> Carillion Canada Inc. was recently named the preferred bidder for the Area Maintenance Contract 2011-12 London.

The contract will begin in May 2012, and will include year-round routine maintenance services for provincial highways in the London, Ont. area at a price tag of more than $156 million.

>> Cadillac Fairview Corporation Limited’s RBC Centre has attained LEED Gold

Certification, becoming the largest certified LEED for New Construction project in Canada. The RBC Centre is a 1.2-million sq. ft. office tower located in downtown Toronto.

>> Aecon Group Inc. and Dufferin Construction Company, a division of Holcim (Canada) Inc., have joined forces to build the Air Rail Link (ARL) “spur line” and passenger station at Pearson International Airport. Aecon announced the financial close of the $128.6-million project, in which it has a 50-per cent partnership. The company will design, build and finance a three-kilometre elevated guideway connecting the Georgetown GO Transit line to Toronto Pearson and a passenger station at Terminal 1. Construction is to be completed by summer 2014.

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www.BobcatAdvantage.com/faceoff1 1.877.505.3580 Bobcat® and the Bobcat logo are registered trademarks of Bobcat Company in the United States and various other countries. ©2012 Bobcat Company. All Rights Reserved. | 1138C-0

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12-02-07 12:00 PM

INDUSTRY NEWS

Test drive Doosan in Tuscan

By Corinne Lynds Every time I have an opportunity to climb into a piece of heavy equipment, I jump at the chance.

For each hole I dig, bucket of dirt I hoist, or rock I break, I gain greater insight into the challenges and obstacles that On-Site readers face everyday.

Two solid days at Doosan’s Editor Boot Camp at the Real Operation Centre (ROC) in Tuscan, Ariz. was invaluable. I had the opportunity to operate a number of excavators and wheel loaders. My favourite, by far, was the DX700LC, the largest crawler excavator that the company offers. This behemoth has a dig depth of 25 ft. 5 in., a maximum reach of 41 ft. 8 in., and a dump height of 26 ft. 10 in.

Although I didn’t have the opportunity to get behind the wheel, the new DA40 articulated dump truck was introduced at the ROC. Still being used for testing purposes at the time of my site visit, the DA40 is the first of a new line of ADTs that will offer increased engine power and torque, higher payloads, lower fuel consumption and enhanced operator comfort.

The DA40, which is currently in production, features a new hydro-gas front suspension. This allows for independent movement on either side, while gaining maximum ground contact and shock absorption.

The new ADT also includes auto lube, permanent sixwheel drive and a powerful engine brake hydraulic transmission retarder.

M

14 / February 2012

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12-02-07 12:01 PM

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Models and colours may not be exactly as shown. Specifications subject to change without notice. For optimum performance and safety, please read your owner’s manual before operating your Honda product.

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10.0

11.0

9.0

10.0 8.0

CONSTRUCTION STATS

7.0

A selection of data reflecting trends in the Canadian construction industry

9.0 lV l ll lll lV l ll lll lV l ll lll lV l ll lll lV l ll lll lV

2006

2007

2008

2009

2010

8.0

2011

7.0

$ billions 7.4 7.0 6.6 6.2 5.8 5.4 5.0 4.6 4.2 3.8 value of building permits decreased 3.6 per cent to $6.1 billion in The total 3.4 November, following an 11.6-per cent increase in October. A decline in the 3.0 non-residential sector, particularly in Ontario, more than offset gains in the N J J J N value of residential permits. The value of institutional permits declined 34.1 2008 2009 2010 2011

Building permits declined in November

per cent to $692 million, while municipalities issued 12.3 per cent fewer permits. Commercial building intentions declined for a second consecutive month, falling 5.1 per cent to $1.1 billion.

thousands 17,600

2006

$ billions 7.4 7.0 6.6 6.2 5.8 5.4 5.0 4.6 4.2 3.8 3.4 3.0 N J 2008

J 2009

J

N

2010

2011

17,400

Construction employment holds thousands steady in December

17,200

17,600

17,000

16,800 16,000

J

2008

J

2009

J

2010

J

2011

D

Following two months of declines, employment rose slightly in December, up 18,000. The unemployment rate edged up to 7.5 per cent as more people participated in the labour market.

Over the past 12 months, employment growth totalled 1.2 per 17,400 cent, with nearly all of the gains in the first half of the year. There were notable employment gains in manufacturing for the month, while there were declines in utilities. The construction 17,200 industry showed little employment change.

17,000

Investment in non-residential construction down

seasonally adjusted

$ billions 16,800 12.0

Investment in non-residential building construction in the fourth quarter of 16,000 11.0 2011 was down 0.6 per cent from the previous quarter, to $11 billion. This J was the second consecutive quarterly decline and largely reflected lower spending in the construction of institutional buildings in seven provinces.

10.0 Spending in the institutional component fell 3.7 per cent to $3.2 billion; investors put $6.5 billion into commercial projects, up 0.8 per cent; and 9.0 investment in industrial projects totalled $1.2 billion, unchanged from the previous quarter.

2008

J

2009

J

2010

J

2011

D

8.0

Source: Statistics Canada

7.0

lV l ll lll lV l ll lll lV l ll lll lV l ll lll lV l ll lll lV

2006

2007

2008

2009

2010

2011

16 / February 2012

16-17_Stats.indd 16

$ billions 7.4 7.0 6.6

lV l

12-02-03 10:19 AM

16-17_Stats.indd 17

12-02-03 10:19 AM

MOTOR GRADERS

Gettin’good

grades Buying the right motor grader, means buying less often

W

By David Godkin

ork horse on the road. Weakling colt in the showroom. That’s the consensus on motor graders since sales dipped sharply in 2008/09. But don’t blame it on the worldwide financial crisis that impacted graders and other equipment categories across North America. Even in a good year motor grader sales are roughly half what they are for excavators, bull dozers and trucks, something Mark Oehnke attributes to work load and durability. “The duty cycle isn’t hard on the grader’s hydraulics, the engine itself or even on the blade.” As a result, says Terex’s director of marketing for road building, a well maintained grader may still be working 12 to 15 years after purchase.

That long turnover rate is the reason Terex got out of the motor grader business four years ago. And it’s not alone in its skittishness around the machine. With a strong motor grader presence in Africa and Asia, Mitsubishi got into the North American market only briefly after receiving “a chance order from a large state government,” says Michael Ivey, manager of operations and communications. Today, Mitsubishi’s grader-related business activities are limited to spare parts provision, leaving it to companies such as Cat, John Deere, Case and Volvo to fill the void.

Motor graders don’t live forever, however. What to look for in a new machine and how to ensure it holds up over time and holds its value are key selling points for dealers anxious about retaining a toe-hold in a small niche market. Above all it means understanding the customer’s needs.

Take the measure of the machine…

Brad Hoey knows what he wants in a motor grader. The general superintendent for Island Asphalt in Victoria, B.C. first asks what type of jobs he’s likely to oversee in a year: road and highway construction? Small backyards and driveways? Snow removal? Then he matches these to the size of the grader and its mould board, in his case a Cat 1400 grader with a 14-foot mould board for larger

“Once a machine gets over 10,000 to 15,000 hours, you ought to be trading it in.” highway jobs and a Champion motor grader with 12-foot mould board for small malls and driveways. Hoey’s caution: Never, under any circumstances, oversize the mould board.”

“If you put a 14-foot mould board on a small grader then you’re going to have problems pushing the material ‘cause your tires will spin; and if your tires are spinning you’re not getting productivity and can do damage to the drive train.”

It’s not about power. It’s not even just about the blade’s width; the angle of the blade and its ability to perform deep cuts and move material over short and long distances are also important.

So, too is the blade’s durability, Hoey tells us, notably during snow removal where operators typically encounter manhole covers, water

18 / February 2012

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MOTOR GRADERS

Measuring productivity on a grader is about how long it takes to achieve final grade, not about how much material it moves.

valves and extruded curbs that can catch the blade. “If you hit something, there’s got to be a little play there,” says Hoey. “The blade can’t be too rigid.”

Something else to keep in mind when buying new is how well a motor grader retains its value over time. Finning’s paving industry marketing manager Jim Serink recommends prospective buyers check out auction houses such as Ritchie Brothers to see which machines are holding their value. Komatsu’s district manager for western Canada Tony Kosolofski is less sure. “If there’s no-one there at the auction, you can catch the machine for a song. Retail value is better based on what you could get for it privately. The auction is not always a good measure.” Opinions also vary on when to trade in your motor grader and buy new. Island Asphalt’s graders were purchased about 12 years ago and “are creeping up to the 9,000 hour mark,” Hoey tells us. “Once a machine gets over 10,000 to 15,000 hours, you ought to be trading it in.”

But Jim Serink questions the wisdom of waiting more than 7,500 hours before buying new. “It’s just like running a car. Why would you run on a 1952 DeSoto and just pour money into it to make sure it keeps running? Why wouldn’t you just buy a Chevrolet?” The answer, of course, is upfront cost Kosolofski cautions that the “value proposition” for any new or used motor grader “is more than the upfront or re-sale price.

It’s also [about] owning and operating costs.” Kosolofski admits the price tag for Komatsu’s GD655-5 is likely higher than other brands “but you’ll have less down time during the overall life of the

Visibility is a huge factor for grader operators.

Hexagonal cabs improve viewing out the front window.

machine because it’s more reliable and you’ll burn less fuel. It has to be total value, not just purchase price and resale value.”

Great graders deliver the goods…

Productivity is the ultimate litmus test for any machine. Measuring the productivity of a motor grader is a little tricky, unlike dozers, excavators and dump trucks, you can’t judge them based on the amount of material they’re able to move over a given period; graders move a fixed amount of material and so must be assessed differently.

“Typically it’s how long it takes you to get to that final grade and usually that’s judged on the number of passes over a given amount of time,” says Paul Wade, brand marketing manager for Case New

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MOTOR GRADERS

John Deere introduced joystick controls, but retained standard steering wheel control as well.

Holland in Racine, Wis.. Mike Schmidt who markets John Deere graders for Brandt Tractor in Edmonton agrees, adding “a higher blade pull will enable you to move more material, which in turn will cut down on the number of passes in an hour or a day.” Blade pull and blade down pressure—the ability to cut deep—is crucial says Volvo’s global product marketing specialist Predrag Romano, but not every contractor needs both. For example, high blade down pressure is required when cutting through layers of sod during site prep. Lighter jobs require different capabilities, explains Roman.

“The customer who is fine grading or finishing, he could care less about blade down pressure. What he needs is precision of hydraulics, i.e. how nicely, how finely he can grade with a three per cent slope on the road.”

Productivity also depends on operator performance. Improve performance and you’ll get better overall productivity. That was the thinking behind Cat’s introduction four years ago of joystick controls in place of traditional steering wheel controls. By reducing

hand and wrist movement by 78 per cent, Cat reasoned it could reduce driver fatigue and improve productivity. It all looked good on paper, but not so much out in the field where Cat, by its own admission, suffered a dip in sales because of the innovation.

Turns out Cat’s biggest obstacle was not the competition, but operators themselves. Grader operators are considered to be the true kings of the road in highway construction—seated high on their thrones overlooking the lesser mortals in their dozers and back hoes. They’re also mightily resistant to change. According to Tyler Suttill, Brandt Tractor’s sales manager in Surrey, B.C., Cat changed from steering wheel to joystick controls at its peril.

“It’s hurt ‘em a lot. Most motor grader operators have been doing it for 30-plus years and you take the steering wheel out of their hands it’s a big learning curve and one they’re just not willing to take.”

Most agree Cat’s mistake was not that it introduced joystick controls, but that it removed the option of the steering wheel, creating difficulties both on the job and driving the machine in heavy road and highway traffic. “I’m a little old fashioned that way,” says Hoey. “I came up through the trenches and I’m used to a steering wheel…It’s a tough sell to get older operators used to a joy stick.” Seizing on this, Volvo introduced joystick controls, but retained standard steering wheel controls. John Deere did the same.

The Perfect Road!

Serink counters with the safety argument: By Rely on the Wirtgen Group’s full range of products for new construction and rehabilitation of roads. SMS Equipment’s sales and converting the steering and controls to joysticks service experts, based close to your doorstep, offer the expertise the operator never has to remove one hand to wirtgenamerica.com and all-round support you need. navigate the machine. “With conventional graders you have to take your hand off the wheel momentarily to make an adjustment to the www.smsequip.com Your Wirtgen Dealer blade. That’s not good.”

20 / February 2012

5901 18-23_MotorGraders.indd 20

12-02-03 2:56 PM

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11-03-31 1:48 PM 12-02-03 2:56 PM

MOTOR GRADERS

Komatsu’s GD655-5 motor grader.

Protect your man, protect your machine…

rate, i.e. the estimated number of hours a machine will operate Getting the most out of your existing motor grader before buybefore it breaks down. While there is no established industry-wide ing new requires special attention to servicing and maintaining standard, Volvo’s Romano suggests an MTBF of 400 hours is a the unit over its lifetime. That’s especially true in British Columpretty good target. “But again, how do you measure that? “he asks. bia, where wet weather wreaks havoc on a grader’s hydraulics “Some will say, `If my headlight bulb burns out this is not a failsystems. To prevent condensation from entering your grader’s tank ure.’ Well for us it is.” and mixing with the oil, Hoey recommends changing the oil and Getting the most out of your machine is key, but so too is ensurfilters more frequently than the 10,000 hours mark suggested by ing maximum comfort and safety of your grader operator. Comfort some manufacturers. and safety, in turn, are a function of visibil“We service the engines about every 3,000 ity. “Visibility is a huge factor for grader opMake sure when you do hours so the hydraulic systems you’re probably erators,” says Kosolofski. “They’re looking to looking at every 5,000 hours.” Hoey’s company do the best job they can and they need to be purchase new that it comes also employs a shop of up to five mechanics aware of their surroundings and the conditions with a good service plan. to keep its equipment fleet up and running. they’re operating under.” Komatsu’s GD655-5 Schmidt says if those mechanics are doing their features a hexangular cab so the grader’s front job they’ll have an aggressive oil change policy. facing windows are on an angle, eliminating Oil changes on a John Deere grader occur at least every 500 hours, the pillars on the conventional four post cab. with service levels increased on the John Deere’s 872G/GP series “so Serink points out that by eliminating the steering wheel and they’re working on the machines more than they’re servicing them.” moving the controls to the operator’s armrests, you eliminate the And make sure when you do purchase new that it comes with typical hydraulic obstructions. “This opens up a whole new world a good service plan. Fixed service costs are not only economical, of visibility by giving you a direct view of what your blade is doing.” according to Wade, they provide added comfort in the event someAny doubt visibility is key to operator safety and productivity is thing goes wrong with a machine. “You know exactly what your put to rest by Hoey. Older graders don’t have the best visibility, but costs going forward will be and you’re not going to be surprised by in his estimation neither do the new ones. any major failures that come along.” Something else to ask your “So when we replace our grader, visibility will be high up on the dealer about is a machine’s Meantime Breakdown Failure (MTBF) list for how operator friendly it is. Visibility will be number one.”

22 / February 2012

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173-7

we clear the way.

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ALBERTA

ATLANTIC

ONTARIO

Calgary 403-216-1010 Edmonton 780-464-1909 Grande Prairie 780-513-3700 Red Deer 403-346-3473

Dartmouth 902-468-5010 Moncton 506-857-8425 Newfoundland 709-747-4026

Grimsby Orillia 905-643-4255 705-330-0004 Kitchener Ottawa (Stittsville) 519-744-3518 613-836-6633 London (Lambeth) Sudbury (Lively) 519-652-3234 705-692-5801 Mississauga Thunder Bay 905-670-5100 807-475-3052

QUEBEC Baie-Comeau 418-296-3091 Boucherville 450-449-4666 Chicoutimi 418-690-1724

Laval 450-686-8911 Ste-Foy 418-653-2801 Val-d’Or 819-824-2791

Volvo Construction Equipment 173-783 Strongco_On Site23Magazine_ Motor Grader • Size: 8.125”W x 10.875”H Bleed 18-23_MotorGraders.indd

12-02-03 2:56 PM

COVER STORY

Banking

on

Contractors

BY JIM BARNES

24 / February 2012

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Evolution in project financing is pushing contractors into the spotlight

p

ublic-private partnerships (P3s) are here to stay. In this infrastructure-procurement model, many new entrants are finding themselves well outside their comfort zones—especially in terms of finance and risk. “Anybody who comes into it for the first time has a very steep learning curve,” says Steve Nackan, president, AECON Concessions, Toronto.

Risks, security and even the costs of bidding can be surprisingly different from conventional jobs.

cost control The P3 model has been established in Canada for at least a decade. In essence, a private consortium bids on a government project that includes the design, building, financing, maintenance and operation of a public facility for a given term, say 30 years. As well, it assumes virtually all risk for the project over its life cycle.

Typically, the consortium includes a concessionaire (the equity partner), a design-builder (DB) and a facilities management company (FM). In principle, risk is allocated within the consortium to the party best able to manage it. In some cases, the DB and FM may be equity partners as well.

This model allows governments at all levels to control

their costs and get infrastructure built quickly and competently.

“The Government of Canada believes that public-private partnerships offer an efficient, cost-effective option to build public infrastructure,” says Caroline Grondin, senior communications advisor at Infrastructure Canada, Ottawa.

“You are going to see the municipalities move into the asset-management space.

The mid-sized contractors now need to know how this model works.”

Asset management is one theme. “You are going to see the municipalities move into the asset-management space. The midsized contractors now need to know how this model works,” says David Bowcott, senior vice-president and national director, Large Strategic Accounts—Construction and Infrastructure, at Aon Reed Stenhouse Inc., Toronto.

In essence, asset management focuses on maintaining the value of an asset over its life cycle. Much of that responsibility is being shifted to the private sector. “That’s the beauty of alternative financing and procurement (AFP),” says Jim Cahill, senior vicepresident, Project Finance, Infrastructure Ontario (IO), Toronto.

“You’re prescribing hand-back requirements and the buildings are going to look much nicer and be in much better shape after 20 or 30 years, depending on the term of your concession.”

There are additional costs for a P3, including private financing, additional fees and consultants, notes Cahill. On a pure cost basis,

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COVER STORY

FACT The P3 model has been established in Canada for at least a decade.

In essence, a private consortium bids on a government project that includes the design, building, financing, maintenance and operation of a public facility for a given term, say 30 years.

these projects are more expensive than conventional ones, but the value of the risk transfer offsets that, he says.

Governments often justify these projects using a value-for-money approach (VFM). VFM attempts to bring the value of risk transfer into the equation in determining whether a P3 offers taxpayers value.

IO’s board of directors will not approve an AFP project unless positive value for money has been demonstrated, according to Cahill.

Know risk For contractors who are newer to P3s, the biggest changes are probably a greater degree of risk transfer and less pass-through of risk in the contract, says Nicholas Hann, a board member of the Canadian Council for Public Private Partnerships. (Hann is also executive director, Macquarie Capital Markets Canada Ltd.) “There is often a higher level of due diligence on the project prior to pricing than might otherwise be the case,” he notes.

“It is so early in the life of P3s that we don’t really understand the long-term risks.”

These are serious issues. “You really need to understand those risks and be able to mitigate them. If you don’t, the potential liability can be catastrophic for a contractor,” says Jim Dougan, president, Central and Eastern Canada, PCL Constructors Canada. The cap on your liabilities in terms of indemnities on these projects is significantly higher than it would be in a conventional project.

Financing is a very significant risk—lenders may withdraw under certain circumstances. That happened on a couple of projects in Ontario during the credit crisis. New lenders were found, but substantial additional costs—including legal and bank fees—were borne by the contractor, according to Cahill.

“It is so early in the life of P3s that we don’t really understand the long-term risks.

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Unveiling the newly built

on-sitemag.com

We have not seen a 30-year project through its life cycle yet,” says Paul Charette, chairman of the board, Bird Construction Inc., Toronto.

“In terms of limitations in this environment, these [contract] documents are iron-clad. And they are very complex and intertwined,” notes Charette, adding that contractors should be aware of the need for long-term retention of documents.

These projects can be very expensive to participate in. “You can spend millions of dollars, just bidding them,” says Dougan.

Standardized documents can help somewhat with this situation.

That standardization comes from heavy use of templates in some jurisdictions, including IO. “We basically stay with the same template right across asset classes, with minor differences depending on the asset. Once [contractors] have been through it once, it’s easier,” says Cahill.

“Once they and their lawyers spend the time to understand the documents—the RFQ and RFP and bidding documents and schedules and our project agreement… it’s cheaper for them to bid on a contract.”

Financial spotlight Contractors are getting more heavily involved in debt negotiations, our contacts agreed.

“Contractors can tell the story on design, construction and even operational risk better than almost anyone else at the table. Why not utilize their expertise in finance negotiations?” asks Bowcott. Contractors can walk lenders through specifics on a deal. If risks were manifesting on a job, contractors can point to solutions.

There are other challenges. “We are grappling with a lot of issues we don’t have to worry about in our regular business. But that is just a fact of life, as more and more projects are procured with financing,” says Nackan. “Besides the logistics of putting financing together, we have accounting

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COVER STORY

issues, where you might be consolidating the debt that you raise for these projects into your balance sheets.”

An array of financing options is available to One side effect of the move toward P3s has been a tendency by the P3 consortia, including long bullet bonds in government to bundle projects. Essentially, they take a number of the capital markets and amortizing bonds, says smaller projects—none of which would have the critical mass to justify Cahill. There is more and more appetite all the P3 treatment individually—and bundle them together. time from both debt and equity players. “We are The advantages to the government are clear… they are able to pursue seeing better financial rates and the underlying the preferred P3 model and reduce their overall administrative costs at Canada bond yields have come down since the the same time. credit crisis… We have a strong banking comHowever, since P3s start out in the $100-million range, smaller munity and a strong insurance community in contractors are usually unable to bid.

Canada for long financing,” he says.

“They are taking bread-and-butter work away from smaller “We are seeing more credit-enhancement contractors, who simply are not financially able to bid on these products provided by people who would otherprojects,” says Charette. “It’s worse on the highway contracts, which wise be making long-term investments in a P3, are often very small contracts. You have a lot of small paving and to perhaps enhance the completion risk of a maintenance companies that want to bid on them.” project and achieve more effective financing. We “If you take those opportunities from the small contractors today, are seeing things like subordinated debt or juthey won’t be the large contractors of tomorrow. It’s a matter of nior debt to help support the completion risk and fairness.” we are also seeing short-term equity structures as well,” says Hann.

When projects are financed through bonds, ratings agencies necessarily come into play. You have to work with the ratings agency and ensure that they have a This emphasis on construction risk is often overplayed, he says. good understanding of your project risk to get the best possible rat“I am often surprised that people zero in on construction as such a ing. It’s about giving them the confidence that you are taking care risky proposition. If you did an analysis of defaults on construction of things, according to Dougan. “They will want to understand the projects in Canada, you’d find that the rate of default is quite low, basis for your estimate and your schedule. They’ll want to know on a project basis.”

Bundle bugs

“The move to liquid security seems to be an evolution of that kind of financing. Over the past few years, it has kind of become the new normal.” whether you have allowances for weather delays—any contingencies that you might have. They want a pretty thorough overview.”

What can you do to make your project look good to lenders?

According to Smith, your track record is a huge factor. The size of your company and your balance sheet are also keys. And they will want to look at your execution capabilities.

“They’ll look at the construction as an unknown risk,” says Smith. They’ll have analysts investigate the deal. They will do comparisons to what’s on the market and what’s off-market. There will likely be in-depth interviews and reviews, says Smith.

Liquid security One thing P3 contractors must get used to is liquid security. Contractors usually have had to provide support in the form of a letter of credit or cash retention, instead of—or as well as—conventional surety bonding.

“The move to liquid security seems to be an evolution of that kind of financing. Over the past few years, it has kind of become the new normal,” says Tim Smith, senior vice president, Toronto area manager, EllisDon Corp., Mississauga, Ont. Lenders still feel that the overall risk of the project revolves

28 / February 2012

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COVER STORY

around the construction, he adds.

“They are pushing for more and more liquid security, including letters of credit. They are looking less and less favourably on traditional construction security bonds…Basically, they want cash, and a surety bond is essentially a performance guarantee.”

A letter of credit is a “very painful” instrument for a general contractor, he adds. “That’s a tough thing for medium-sized contractors. You can’t pledge your cash to everybody. Outside of the P3 market, we need our balance sheets to be as strong as possible, to retain our bonding capacities.”

The sureties have tried to innovate in response, “One of the big surety companies recently came out with what they describe as a liquid surety bond,” says Hann. Most of the contractors we contacted said that “P3 bonds” have not had an impact in the market yet, with lenders still requiring letters of credit.

Staff is a key consideration, our contacts emphasized. “I can’t overstate the number of people it takes to run a bid and then run one of these projects successfully,” says Smith. “You have to satisfy a lot of different people in a very short period of time.

You are designing, you are chasing permits and you are satisfying reporting requirements to the government, to lenders and to the client.”

Smaller contractors must do a great deal of homework to be profitable in this market. “There is a huge opportunity to participate in the Canadian market and internationally, especially in the U.S.—and a huge opportunity to diversify revenue streams in terms of getting involved in asset and facilities management and maybe even long-term equity,” says Hann.

Jim Barnes is a contributing editor to On-Site. Send comments to editor@on-sitemag.com.

Experience wanted Experience is key to success. “P3s are not that complicated, once you have been through one of them,” says Hann. “More mid-sized Canadian contractors are preparing themselves to work in this area. Many of those may be participating in P3s in joint ventures with other players.” After a couple of projects, some of these companies are stepping up to lead P3s in their own rights.

“They develop contacts of their own and they are familiar with the procedures to be followed,” he says.

“The face of the contractor has really evolved over the past decade. We now have structured finance staff who understand how structured finance works. We also have expert facilities management people on staff so that we fully understand what that business is about and what the life cycle issues that we need to manage are,” says Dougan.

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12-02-03 10:17 AM

ASPHALT PAVING

hot“onhot” Ministry of Transportation of Ontario attempts first “hot-on-hot”commercial paving project in North America

T

By Andrew Snook

his past September, the Ministry of Transportation of Ontario (MTO) paved its way into North America’s history books, by testing out a new asphalt technology.

The MTO’s hot-on-hot trial run on Highway 12 near Midland, Ont. was the first commercial construction project using the technology in North America.

The drive to test this technology is the potential 35-per cent reductions in paving times, increased life spans for roadways, reduced closure times and less environmental impact.

The testing ground for this project was a 6.7-kilometre stretch of Highway 12 near Midland, which involved removing existing pavement and replacing it with two simultaneous layers of hot mix asphalt—a binder course then a wearing course.

The project began construction on September 8, 2011 and was completed on September 23, 2011.

Anil Virani, senior bituminous engineer for the MTO, explains

the section of Highway 12 was chosen for the trial for a couple of reasons: it included thickness designs and mix types that the MTO uses in many applications; provided the opportunity to demonstrate two-lane-wide paving, as well as the conventional single-lane-wide paving; and there was enough tonnage of mix types for the process to be economically viable for a contractor.

The winning bid The MTO specified that the trial project had to be hot-on-hot paving and the bid was awarded to King City, Ont.-based K.J. Beamish Construction Co. Ltd. K.J. Beamish has been building and maintaining highways and roads since 1946, has operations located throughout central Ontario and employs more than 600 people.

The project’s overall cost is approximately $5.8 million.

There are two types of hot-on-hot paving technology currently

30 / February 2012

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ASPHALT PAVING

The Ministry of Transportation of Ontario chose a 6.7-kilometre stretch of Highway 12 near Midland, Ont. for the trial run.

available; Dynapac’s Compactasphalt and Wirtgen’s Vögele InLine Pave train. K.J. Beamish chose to go with Dynapac’s Compactasphalt, a single machine that paves both courses of asphalt, using two hoppers and two compaction screeds.

The InLine Pave uses two separate pavers and a conveyance system. Dynapac supplied its $1.8-million machine for the trial and K.J. Beamish rented the equipment on a monthly rate.

To ensure the project would run smoothly, K.J. Beamish sent its foreman and head mechanic to Dynapac in Germany to learn about the machine firsthand to prepare for the project.

“We weren’t going to take any chances that this thing was going to be a quick learn,” says Fernando Magisano, vice-president of technical services for K.J. Beamish. “Our schedule dictated that our guys had to be on it in a relatively short time here.”

Dynapac shipped over a team of three operators and one of its top technicians from Germany to assemble the machine and work

side by side with K.J. Beamish’s crew, training them for almost two-and-a-half weeks. Dynapac also had two of its Canadian representatives on-site for the majority of the paving.

K.J. Beamish used an 11-man crew for the project, not a big difference from its standard paving crew of 8 to 10 people. It needed one extra person to operate an additional roller used on the project.

The Midland trial The trial consisted of three different sections of Highway 12 being paved using the hot-on-hot process. The lift thickness varied from 90 mm (30 mm surface course and a 60 mm binder course) to 140 mm (30 mm surface course and a 110 mm binder course).

Magisano says there were challenges his crew had to overcome when getting used to the equipment, but in the end the team adapted quite well.

“From day to day the German crew was doing less and less and

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ASPHALT PAVING

our crew was doing more and more.”

Magisano adds there wasn’t a lot of new technology; it was just put together in a new form.

“It’s complex in that it doubles up on what we traditionally have to control. Instead of one screed there’s two screeds, instead of one feed system, there’s two feed systems,” he explains. “Once they were used to the machine, they realized that even though there’s double the number of controls and some of the electronics were a little bit different from the particular paver that they’re used to operating, at the end of the day there wasn’t an awful lot of difference to what they were doing.”

In addition to learning how to use the technology efficiently, Magisano says another challenge was the logistics behind keeping the machine fed with binder mix and surface mix. It required two types of mixes at once, and they were arriving from two separate plants, one in Midland and another in Orillia more than 40 kilometres away.

The machine also takes more time to set up than conventional pavers, and is not proficient at paving short-radius ramps and intersections. Due to safety concerns stemming from creating 140-mm lifts that would be driven on by incoming traffic, conventional pavers were used for paving intersections, turning lanes and lane widenings.

Dynapac’s Compactasphalt is a single machine that paves both courses of asphalt simultaneously. It was flown in from Germany for the Midland project.

mix will take less time to cool than placing two thinner lifts of 70 mm and 40 mm in one night of operation.

Potential advantages

There are several other potential benefits of using hot-on-hot paving.

This includes reducing the surface course by 25 to 30 per cent, no longer requiring a tack coat between lifts and having the paver running a single rolling pattern.

Raymond says the technology is not ideal for Highway 12 and is better suited for straight-line pavCompaction satisfaction ing on higher-volume roads with Magisano says one of the biggest extended closure times, such as “With this mix, because the cooling advantages he found using this green-field construction. time is so long, we had an awful lot technology was in the compaction.

The environmental benefits of opportunity to do good compaction.”

“With this mix, because the coolare promising too. According to ing time is so long, we had an awful Raymond, there are three “green lot of opportunity to do good comthrusts” with this technology: paction,” he says. “It just gives you so much more time behind the 1. It allows operators to use less of the premium surface course paver because you have such a thick mass that stays warmer longer.” aggregates, because the technology allows you to have a thinner Chris Raymond, head of the bituminous section of the MTO, agrees. surface course.

“Based on this project, compaction seems to be very good and 2. Reduced road closure times lessons the amount of emissions we’re not seeing any crushing of the aggregates when you compact, produced by traffic delays. which we sometimes see with conventional.”

3. The pavement lasts longer.

Virani points out that one of the challenges this project posed Virani points out that the paving process could also eliminate any was allowing enough time for the 140-mm thick lift to cool. “Some deficiencies related to longitudinal joint construction. of the cooling curves that we presented showed up to 7 or 7.5 Both the MTO and K.J. Beamish took a variety of full-depth core hours before we considered it appropriate to put traffic back on it.” samples at the joints to test the level of compaction.

However, Raymond points out that one 110-mm interval of hot Magisano says K.J. Beamish will be doing some testing of the

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ASPHALT PAVING

core samples during the off season to check the core densities, and may slice the cores into 50-mm cuts to see if there are any differences in compaction.

“We’re hoping we can answer it to the positive that the joints will work just fine,” Magisano says.

K.J. Beamish plans on sharing their findings with the MTO. Bill Wilcox, Dynapac’s heavy equipment product manager, says using a dual paving system can make paving up to 35 per cent faster on the right project.

“Upon the crews getting comfortable and fully trained, and logistics catching up to the truck deliveries, then those kinds of numbers can be realized,” he says. “It doesn’t happen on the first

MTO project timeline January 2010 Ministry of Transportation of Ontario (MTO) becomes aware of Hot on Hot Technology.

March 2010 MTO advises the Ontario Hot Mix Producers Association of Dynapac’s Compactashpalt Technology at its annual general meeting.

November 2010 Manufacturer presentation to MTO and contractors.

Using a dual paving system can make paving

December 2010

up to 35 per cent faster on the right project.

Manufacturer presentation at OHMPA fall seminar

day out, intense training is required. It is a different concept and different process, but those numbers are being realized in Europe where they have been doing this for four or five years.”

Wilcox says the very best opportunity for this type of technology would probably be in a big public-private partnership (P3) where parties are looking for a long-term guarantee on the asphalt they’re building.

MTO begins contract preparation, spec

February to April 2011

Barriers to hot-on-hot technology Magisano said a major barrier to this technology is the way some contracts are formed.

“It comes down to the mindset of the owner, as to how you’re going to design a contract to allow this paving operation to work, and by that I mean you’ve got to realize that you have two different mixes coming to the paver,” he says. “The logistics of getting your trucks in the right order can’t happen in a single-lane closure. You just don’t physically have enough space to do that. You have to think of longer closure times, because this paver as compared to a conventional paver takes much longer to set up. You’ve got two sets of screeds, not one, because of the uniqueness of what it’s doing, the setup times and the shutdown times are roughly three times longer [than conventional machines].

“Most of our 400-series paving is done at night. We’re lucky to see 10 p.m. closures and we have to have the roads open at 6 a.m.

That short time period is a real disadvantage to the equipment because it takes so much time to set up and shutdown the operation.”

The sheer size of the paver makes for additional challenges, particularly if it is double-lane paving. “We had it set up for an eight-metre paving lane section. Now, you cannot physically tear that paver down in under two or three hours and float it out of the roadway,” says Magisano. “It would have to have a place to park

development and site review.

May 2011 The MTO advertises the contract for the Midland Highway 12 Hot on Hot trial project.

June 2011 The contract is awarded to K.J. Beamish Construction Co. Ltd. September 2011 The Hot on Hot trial project in Midland begins on September 8, 2011 and is completed on September 23, 2011.

in between shifts. There are very few places where you could crawl that machine and have it park eight-metres wide until the next night. So it comes down to selecting the right contract in order to get the best productivity out of the machine.”

The MTO or owner of the highway would need to allow longer closure times, or extended lane closures instead of six-to-eighthour closures.

“They’re going to have to accept the fact they’re going to have to close down a section of road and have either a detour system or just a closure of a certain number of lanes for two to three days,” says Magisano. “Then you get good production and you can go two crews, 24 hours, get in and out, get a lot of tonnage done in an awful hurry. Unless we see those sort of changes in the way the contracts

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ASPHALT PAVING

are designed, then there’s limited use for this sort of equipment.”

Lars Narsingh, manager of commercial support and development at Wirtgen America, offered a similar sentiment in regards to the need for more contracts that use this technology, stating that contractors will be hesitant to invest until there are more opportunities available.

“If the utilization of this equipment is increased, then contractors can afford to buy it,” Narsingh says.

Wirtgen’s InLine Pave costs approximately $1.2 million.

Pave-in time

The Wirtgen Group’s Vögele InLine Pave train uses two separate pavers and a conveyance system. It has been used in various paving projects across Europe.

The Ontario Hot Mix Producers Association (OHMPA) organized a “Pave-in” during the trial, and had more than 85 people from the road building and hot-mix paving industries in attendance to see the new process, as well as listen to presentations by the would be amazing for that machine. You could really do, not only MTO, K.J. Beamish and Dynapac. an excellent job, but do it very quickly and efficiently.”

Michael O’Connor, CEO of the OHMPA, says he wasn’t sure As motorists make their way to-and-from Midland on Highway that this technology would extend roads’ life expectancies 10 or 12 over the next decade or two, only time will tell if this technology 15 years, but he did think it would eliminate potholes. goes into North American history books as either a breakthrough “You’re still going to have to go in after 22 years or 25 years or a bust. and take the surface off by milling and grinding it and putting it back,” he says.

“But, you’re going to have less mainteIntroducing from nance and excellent surface to deal with.

Just the fact that you’re putting both those pavements down at the same time, you get a complete bond between the two, so there’s no place for a pothole to go.

“They’re getting excellent compaction because of the very thick lifts, and it’s something we’ve been saying even in regular paving, especially when it gets late in the year.

They should be finding ways to put down thicker lifts, because it holds the heat.”

According to O’Connor, the technology is ideal for green field construction such as the current project on Highway 407, or a 400-series highway, but making the technology affordable for a contractor to purchase all comes down to the MTO, since Fully-Integrated Construction they are the prime candidate for using this Apps That Handle Real Work equipment in Ontario.

“Unfortunately, that big hot-on-hot paver  Time cards  Job site photos & notes wouldn’t work well in most municipalities,  Estimates & proposals  GPS location of trucks Innovative unless you’re talking like the City of Toronto Software  Change order estimates  Alerts, reports, & much more! for the and the Don Valley Parkway,” he says. “So Construction Industry it really gets down to being mainline pav800-683-3196  Designed for construction  Constant internet not required ing, and the absolute best mainline paving Flexible technology Integrates with accounting www.hcss.com/apps   would be a new road or virgin territory. That

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MOBILE MAPPING

How mobile mapping can save you money A new technology tool for contractors

y

BY RICHARD RYBKA

ou may not be familiar with mobile mapping systems, but the fact is you probably use the information they produce every day. Each time you access the Internet to map a driving route or find a restaurant near your destination, you are using data that was generated by a mobile mapping system. Do these systems have a place in construction? The answer is definitely YES. Mobile mapping systems are rapidly gaining acceptance as the new standard for data collection. These technologically advanced

systems quickly collect visually dynamic information in diverse environments such as highways, urban streets, railways and pipeline routes. More importantly, they have created a new class of data (digital information) that provides a totally immersive 3D view of objects and surroundings.

CHanging data environments Data is the backbone of the design/construction/facilities management workflow. Today, the acquisition and consumption of data is

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MOBILE MAPPING

Mobile mapping systems quickly collect visually dynamic information in diverse environments, such as highways, urban streets and pipeline routes.

To establish the location and orientation of a vehicle as it moves along the surface of the earth, three positioning technologies are used: Global Navigation Satellite System (GNSS) receiver and antenna GNSS signals provide information to establish the x, y (horizontal) position and z (vertical) position of a vehicle on the earth.

generally managed in 2D environments. Base data for planning and design is collected by mapping discrete points, one-by-one, in the field. Two-dimensional paper plans are generated for the bidding, construction, and inspection phases of the project. As-built drawings are created on the original paper plans. After construction, the owner receives reams of paper plans and record documents for managing the facility.

Data produced by mobile mapping systems provides a better replication of reality than 2D data sources. There is less correlation work for the mind to do. Imagine trying to visualize the conditions on a site, or plan a project, using traditional discrete point data and a stack of individual photographs. We go back and forth between the two data sources, trying to match up what we see in the picture to what we interpret from the point data. We are viewing in 2D while our mind is trying to envision in 3D. Now compare this to opening a 3D dataset on your computer screen. Rotate, pan, and zoom 360 degrees from the centre of an image set. The images provide instant cognitive recognition of the setting and features—we immediately see and comprehend exactly what we are looking at. We can navigate freely through the project as if we were standing on site. Dense clouds of geospatial points enable us to measure and locate features to a high degree of accuracy.

How mobile mapping systems work The operation of mobile mapping systems is best explained as the integration of two subsystems: vehicle positioning components and information sensors.

Inertial Measurement Unit (IMU) As a vehicle moves along the earth’s surface, it also has motion similar to a plane traveling through the air—roll, pitch and altitude.

While we hardly notice these motions when driving, this information is required for the proper alignment and registration of data from sensors.

Distance Measurement Instrument (DMI) DMI’s are attached to each of the rear wheels of a vehicle. These devices measure revolutions that are used to track velocity and distance. Direction can also be extrapolated from DMI’s since the inside wheel revolves slower than the outside wheel when turning.

We can count on the IMU and DMI’s to provide continuous, uninterrupted information to the system as the vehicle travels. This is not the case for GNSS. Sky view obstructions such as tall buildings, tree canopy, overpasses and tunnels can block satellite signals.

This results in a temporary loss or degradation of the vehicle’s x, y, z position on the earth. But the two other redundant positioning components provide supplemental information that contributes to the processing of an accurate vehicle trajectory (path).

Two categories of information sensors are typically used in a mobile mapping system: Laser scanners Laser scanners operate on a principle known as LiDAR (Light Detection and Ranging). Emitters scan an area with focused light beams of a certain frequency. The light beams are reflected back to a sensor after striking objects. The time it takes for the beams to return is recorded and used to compute distances to the objects. Laser scanners produce millions of geospatial points with

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horizontal (x, y) and vertical (z) values. Groups of these points are known as a “point cloud�.

Imaging devices Digital single-frame and video cameras are typically used with mobile mapping systems. Single-frame cameras can be mounted in an array to cover targeted viewing angles, usually to the front and sides of the vehicle.

For example: one manufacturer offers a mobile mapping solution that uses an imaging device with six cameras in one enclosure.

The capture rate of images can be set electronically for time or distance intervals. After the data is collected, processing software stitches the individual frames to create a 360-degree panoramic or spherical image.

Data collected during a mobile mapping mission is typically processed in an office environment with specialized software.

GNSS data from the mobile mapping system can be post-processed with satellite data logged with an on-site receiver or obtained from a reference station network to improve accuracy.

Reports from contractors using mobile mapping systems indicate a 50 per cent reduction in data collection costs and a fourfold increase in productivity.

After processing, the resultant data products consist of an accurate vehicle trajectory, a 3D point cloud comprised of millions of geospatial points, and 360-degree spherical images.

Construction applications Mobile mapping is an emerging technology and the benefits are just beginning to become well known. These systems, compared to conventional data collection methodologies, offer tremendous benefits. Reports from contractors using mobile mapping systems indicate a 50 per cent reduction in data collection costs and a fourfold increase in productivity. Data can be collected at normal roadway travel speeds. Safety is greatly improved—mapping is accomplished securely from the interior of a vehicle, eliminating the risks of placing personnel in or near traffic corridors.

Construction applications for mobile mapping systems are almost endless. Consider a highway expansion project as an example. At the planning stage, the corridor for the project can be quickly mapped to obtain important engineering and cost information. Existing features, such as light poles and trees, can be located and identified.

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MOBILE MAPPING

RSS used mobile mapping to report on the quality and accuracy of grade restoration a long a pipeline corridor in Austrailia.

Using this information along with the images, a determination can be made as to whether these objects will need to be removed, relocated, or replaced if in poor condition. A surface model can be derived from the point cloud using CAD software to study drainage patterns.

During the construction phase of a project, the site is “inspected” by periodic passes with a mobile mapping system. Topographic models of the roadbed can be created from point clouds. By comparing models of current and prior surfaces, earthwork volumes can be calculated. A continuous as-built may be recorded as features and pay items are installed. A complete visual record of the project at different points in time is created with high-quality images, providing a documented history for future reference.

Large scale contractors often have several shops, equipment yards, asphalt plants, and other facilities at different geographic locations. Physical management of these remote locations is often challenging. By collecting a mobile mapping dataset of each site, managers can access 3D views of roads, buildings and yard inventory at their desktop computers. Costly site visits to determine conditions or identify problem areas at each location are eliminated. Changes are quickly documented by re-driving a site.

Decision making and management processes are streamlined and expedited.

Earlier this year, RSS was commissioned to report on the quality and accuracy of grade restoration along a pipeline corridor leading to the Victorian Desalination Project. Chambers and Nolan mapped the 10-kilometre long by 40-metre wide route. The project would have taken weeks using conventional survey methods. Using the mobile mapping system, they completed the mapping in four hours and delivered their report to the client on the following day.

On another project, RSS completed a full-feature survey of a proposed route for an 18-inch diameter water line. Deliverables to the client included DOT-coded CAD drawings and DTM’s. RSS covered eight kilometres of suburban streets in metropolitan Melbourne in one day. A project analysis concluded that mobile mapping resulted in a 30 to 40 per cent cost reduction in field survey costs over traditional methods. It also enabled a quicker turn-around of deliverables with full photographic records of the route conditions.

Mobile Mapping’s Future in Construction

Case Study—Rapid Survey Solutions

Based on the tremendous benefits of mobile mapping systems, it’s clear that this emerging technology will soon be used for numerous applications in construction surveying, engineering, and management. Successful contractors are resourceful and always seeking methods and technologies to improve productivity and efficiency. Mobile mapping systems are helping them to achieve these goals.

Brad Chambers and Nick Nolan, two men with experience in construction surveying and management, came together to form RSS —Rapid Survey Solutions. This Australia-based company is using a mobile mapping system for a widening spectrum of construction survey and engineering projects.

Richard Rybka is a mobile mapping specialist with Topcon Positioning Systems. Send comments to editor@on-sitemag.com.

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The Advertisers’ Index is provided as a free service to our advertisers. on-sitemag.com / 41

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12-02-03 3:15 PM

RISK

By David Bowcott

A

The design procurement strategy

s total cost of ownership (TCO) and asset performance certainty (APC) continue to gain momentum within the asset procurement sector, there’s a greater focus on creating value by more thoughtfully integrating the key phases of an asset’s life: design, finance, construction, and maintenance and operations. Out of these four phases, many experts believe the greatest risk comes from the strategy chosen to procure design and construction. This is largely the first decision any asset owner must face. The two primary options are: 1. Design-bid-build or DBB (also known as design tender or traditional): The owner of the asset procures the design separately from the construction (design first and then tender for construction of the design); and 2. Design-build or DB: The owner of the asset procures the design and the construction from a single entity.

Both options have their advantages and disadvantages. Some believe the DBB model gives the owner impartiality, fairness and cost effectiveness. Others believe DBB creates an adversarial model whereby the pillar of design will fight with the pillar of construction, and the owner will lose (what appears to be a lower-cost procurement model can cost the owner through dispute and lifecycle defect costs). Whichever model you choose, somebody is going to be procuring the design and somebody will be integrating that design into labour and material in order to create the asset.

Today’s topic isn’t about which procurement model is ideal, but design procurement practices that will help either model to succeed.

Whether the asset owner is procuring the design, or the builder has entered into a DB contract and is procuring the design, the strategies chosen during design, procurement and integration of that design into construction are vital to success. The following represent some strategies to think about when procuring and integrating design, whether you are the owner or the builder.

Designer prequalification: Today’s construction economy continues to drive towards better counter-party risk assessment. Though the prequalification process

“Some believe the DBB model gives the owner impartiality, fairness and cost effectiveness.” appears to be focused on owner’s prequalifying builders and builders prequalifying subcontractors, it should also include owners and builders prequalifying their design partners. Some areas of focus should include: a) designer’s history, b) organizational structure, c) limitations of liability and insurance, d) financials, e) references, f) office visits, and g) culture and philosophy.

Quality assurance/quality control integration: Solid QA/QC practices require better integration between design, contractor and subcontractors. Does your project have a best-in-class plan around QA/QC? It all starts with design, and sound QA/ QC strategies will ensure proper payment processing, early warning on faulty design

and/or workmanship, and reduction in operational defects.

New delivery models: some of the new delivery models are focusing on greater collaboration between design and construction (and in some cases operations). This includes design-build, public private partnerships and integrated project delivery.

Even incorporating some of the strategies used in these models can lead to greater likelihood of success with your project.

3D modelling (or building information modelling/BIM): technology such as BIM can lead to more effective integration of design into labour and materials (ie. ensure buildability).

Total cost of ownership (TCO) strategy: Are you adopting a TCO framework to develop your asset? If so, does your design partner have TCO experience and data to assist you in your procurement?

Modular construction: New strategies like modular construction (construction of portions of the asset off-site and away from project risk) can reduce risk and improve design-build risks.

These represent just a few design procurement strategies that could improve likelihood of success for the procurement of your asset. Though design procurement strategy (DBB or DB) is vital to success, so too are the practices used when converting design into construction.

David Bowcott is senior vice-president, national director of large/strategic accounts, AON Reed Stenhouse Inc. Send comments to editor@on-sitemag.com.

42 / February 2012

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CONTRACTORS & THE LAW

!

By Bradley Freedman and Chris Eagles

C

Avoiding IP ownership surprises

onstruction contracts often include obligations related to the ownership of the intellectual property in work product (designs and other project documents) created in connection with the project. To fulfill those obligations, businesses often include intellectual property provisions in their agreements with employees and independent contractors who actually create the work product. However, in 2011, the B.C. Supreme Court concluded that those kinds of agreements do not assign legal ownership of copyright in works created after the agreements are signed. Ownership of copyright in a work can only be assigned by an agreement that is signed after the work is created. As a result, before agreeing to transfer ownership of intellectual property rights to a third party, you should ensure that you have obtained, the necessary rights from the persons who create the relevant works.

The Century 21 case Century 21 Canada Ltd. Partnership vs.

Rogers Communications Inc. were involved in a dispute over the unauthorized copying of property descriptions and photos from Century 21’s website for use on a real estate listings website operated by Rogers’ subsidiary, Zoocasa. Century 21 and its co-plaintiffs (a brokerage business and two real estate brokers who created some of the copied property descriptions and photos) asserted various claims against Rogers and Zoocasa, including infringement of copyright in the property descriptions and photos. Century 21 claimed a right to sue for copyright infringement based upon license and assignment agreements signed by the

co‑plaintiffs before the property descriptions and photos were created. The Court ruled that Century 21 could not maintain the copyright infringement claims, because the license and assignment agreements did not give Century 21 ownership of copyright in the property descriptions and photos or an exclusive license to use them. In coming to its decision, the Court followed the reasoning in an old English case, which applied basic property law principles to rule that an agreement cannot effectively assign legal ownership of copyright in a work that has not yet been created. Instead, an agreement assigning copyright in a future work only gives the assignee an equitable interest in the copyright once the work has been created and a right to require the copyright owner to execute a proper assignment after the work has been created. Applying those principles, the Court held that only the co-plaintiffs, who had created the property descriptions and taken the photos, had legal ownership of copyright and therefore the right to sue for infringement.

Analysis and recommendations The ruling in the Century 21 case has potentially broad implications. The fundamental underlying principle—the common law does not recognize an assignment of property that does not exist when the agreement is signed—could apply to all kinds of intellectual property rights and thereby limit the effectiveness of agreements signed when an employee or independent contractor is first engaged. It is important to note the Canadian Copyright Act provides that in most situations copyright in works created by employees in

the course of their employment is owned by the employer without a formal assignment agreement. However, that statutory rule does not apply to other kinds of intellectual property rights (such as patentable inventions) created by employees or to any intellectual property created by non-employees, such as independent contractors.

To avoid this problem, businesses should ensure newly-hired employees and independent contractors sign an agreement that properly assigns all intellectual property they create during their employment or engagement (and waives non-assignable rights) AND requires that they agree to execute additional agreements confirming the assignments and waivers after future works are created. For employees and independent contractors who have already been hired, businesses should consider requiring them to sign a supplemental agreement (supported by valid consideration) to address these issues.

Where a construction contract provides for the transfer of ownership of intellectual property rights in project-related work product, the contracting parties should consider implementing practices to ensure that the transfer of rights is confirmed after the work product is created (for example, as part of the design review process, during final project closeout or as a condition of final payment) by appropriate agreements signed by the parties and the workers who created the work product.

This column is provided for general information only and may not be relied upon as legal advice. Send comments to editor@on-sitemag.com.

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