Alberta Construction Magazine September 2016

FALL 2016

“ WE ARE HERE FOR THE COMMUNITY. IT IS ABSOLUTELY ESSENTIAL—THE COMMUNITY WILL COME BACK.” Fort McMurray contractors prepare to rebuild their city

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The New Project Era report inside

PAGE 35

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TABLE OF CONTENTS

THE ENERGY ISSUE

VOLUME 37 NUMBER 3 | FALL 2016 COVER STORY

22

OUT OF THE ASHES The Fort McMurray construction community prepares for the daunting task of rebuilding its fire-ravaged city

BY KIRAN MALIK-KHAN

FEATURES

SPECIAL REPORT

29 MAJOR PROJECT IN A MINOR KEY The Sturgeon Refinery’s construction strategy is all about avoiding the pitfalls of being a megaproject

51 THIS SPACE FOR RENT A glut of office space in downtown Calgary dims prospects for future commercial construction in the core

BY TRICIA RADISON

Nuts & bolts . . . . . . . . . . . . . . . . . . . . . . 11

COVER IMAGE: GREG HALINDA

35

BACK ON TRACK

THE NEW PROJECT ERA

After fire destroyed a Mayerthorpe trestle bridge, crews worked around the clock to rebuild the crucial rail link in 20 days

Aligning capital costs with new market realities

BY CANDICE G. BALL

BY JOSEPH CAOUETTE

NEWS

59

ASSOCIATION UPDATES Alberta Construction Association . . . . . 63

EVERY ISSUE Legal edge . . . . . . . . . . . . . . . . . . . . . . . . 73

Project update . . . . . . . . . . . . . . . . . . . . . 76

Calgary Construction Association . . . . 65

People to know . . . . . . . . . . . . . . . . . . . . 74

Edmonton Tower

Edmonton Construction Association . . 71

Ian MacGregor, vice-chair, Resource Diversification Council

Time capsule . . . . . . . . . . . . . . . . . . . . . 78 Canadian Northern Railway Roundhouse

Alberta Construction Magazine | 7

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“Small is beautiful,” wrote the economist E. F. Schumacher, who popularized the now-familiar phrase. Less commonly quoted is his follow-up: “To go for gigantism is to go for self-destruction.”

Those words were not about construction, but project managers around Alberta would surely nod their heads in agreement with the sentiment. Large projects often come with large problems. Years of megaproject overruns and schedule delays have proven that point over and over. But there are signs that industry has learned some lessons from those difficult projects.

Consider Field Upgrading’s new 10-bbl/d pilot project near Fort Saskatchewan, Alta., which launched in June. Using technology from the U.S., the company has developed a simple, efficient system for upgrading bitumen: add sodium to draw out the sulphur, ship the upgraded bitumen to the coast for use as bunker fuel and recover the sodium for reuse in the process.

I was particularly struck by something said at the launch by Guy Turcotte, a longtime veteran of the Alberta oilpatch and chairman of the company. He explained to me that one of the major motives behind the project was finding a smaller alternative to massive upgrading projects. Their goal is to break everything down into bite-sized 2,500-bbl/d units, each consisting of 10 modules. Want to build a 10,000bbl/d upgrader? Just order four units.

“We can do this on a much smaller scale and without the construction execution risk of these very large projects,” he said. “That’s what got us initially really interested in this.”

On the opposite end of the spectrum is the Sturgeon Refinery, an $8.5-billion megaproject with over 5,000 workers on a site not far from Field Upgrading’s more modest digs. But our look at construction of the refinery (page 29) shows that the two developments are more alike than you would first imagine. The Sturgeon Refinery is not so much a single megaproject as six or seven large-but-manageable projects occurring simultaneously. Like everyone else in the industry, the refinery’s owners have seen enough giant projects self-destruct to know bigger is not necessarily better.

This is just what it looks like to build in “The New Project Era,” as described by a special 16-page report included in this issue (page 35). Produced by our parent company, JWN, this report outlines the challenges facing the Alberta heavy industrial construction industry in a time when project owners are struggling with considerable constraints on capital spending. It’s essential reading for everyone involved in the industry.

Still, we should not forget there are many great projects underway in this province. In fact, why not help us shine a spotlight on a few? If you’ve been involved in an exceptional project, head to albertaconstructionmagazine.com and nominate it for our annual Top Projects Awards. Submissions are open until September 30.

The winners will be featured in our winter issue and celebrated at an awards event in Edmonton on November 30. Good luck to everyone!

Joseph Caouette

jcaouette@jwnenergy.com

 COMING NEXT ISSUE: Alberta Construction Magazine’s Top Projects Awards winners are revealed.

Alberta Construction Magazine | 9

NUTS & BOLTS News briefs from Alberta and the rest of Canada

The Leduc Recreation Centre will be partly powered by a new array of 3,622 solar photovoltaic panels on its roof.

PHOTO: ENMAX

SOLAR POWER LIGHTS UP LEDUC REC CENTRE The Leduc Recreation Centre is now partly powered by the largest rooftop solar array in Canada.

According to project proponents, the 78,000-square-foot array is 25 per cent larger than any other rooftop setups in the country. Encompassing 3,622 solar photovoltaic panels, the 1.15-megawatt system can provide for up to 15 per cent of the centre’s annual energy needs. The reduction in the centre’s energy bill could translate into up to $90,000 in cost savings each year.

The project is just the first of two solar retrofits being done by the City of Leduc with the support of ENMAX’s solar leasing program. There are also plans to install 630 kilowatts of solar panels on top of the city’s

Operations Building. The system is expected to fully meet the building’s power needs.

“The sheer size of this solar installation as well as the subsequently planned Operations Building retrofit, will lead to emission reductions of over 1,000 tonnes per year, the equivalent of taking about 200 cars off our roads and a significant step towards reaching our future goals,” says Leduc Mayor Greg Krischke.

The two projects will cost $3.1 million. The funding was partly provided

by ENMAX’s solar leasing program, which is being supported by the Climate Change and Emissions Management Corporation.

Alberta Construction Magazine | 11

nuts & bolts

Cure for ‘concrete cancer’ discovered

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University of British Columbia researchers have found a cure for “concrete cancer.”

“Concrete cancer” is the chemical reaction where alkaline properties in cement paste react with silica properties that can occur in recycled concrete additives such as glass, causing concrete to weaken, expand and crack.

In their study, published in the journal Construction and Building Materials, associate professor of engineering Shahria Alam and co-researcher Anant Parghi found that by adding a water-based, synthetic rubber polymer, fly ash and silica powder to the concrete mixture, they were able to effectively neutralize negative chemical reactions and produce concrete 60 per cent stronger than previously believed possible.

“Every year, millions of tons of glass bypass recycling centres and end up in North American landfills,” says Alam. “It now looks like we can replace up to 25 per cent of the cement materials that had to be mined for cement production with glass.”

The glass involved in the study was taken from the landfill in Kelowna, B.C.

12 | Fall 2016 albertaconstructionmagazine.com

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nuts & bolts

FORT MCMURRAY

PHOTO: ISTOCKPHOTO.COM/ETERNALCREATIVE

HOTEL RESUMES CONSTRUCTION

The new Microtel Inn & Suites by Wyndham in Fort McMurray has begun to rebuild after being hit by fire—again.

Construction work resumed on the 139room hotel late in June after the project team identified four small areas with fire damage and completed tests for contaminants on site.

When the Fort McMurray wildfires forced an evacuation of the city on May 3, the hotel had been preparing to pour the foundation for a second time.

That’s because a fire had wiped it out earlier on Christmas Day last year. Police have been investigating the incident as a suspected case of arson.

“It is hard to imagine being impacted by two separate fires within the span of five months, but fortunately this time around our foundation was unharmed, and we have had great cooperation from city officials and our trades to get back to work and start the process of rebuilding Fort McMurray,” says Eric Watson, chief operating officer of project developer MasterBUILT Hotels.

The project, jointly owned by Mikisew Group of Companies and Superior Lodging, is expected to open in summer 2017.

Both companies also own the city’s Super 8 Motel, which was completely destroyed by the fire. They plan to rebuild on the location of the former Super 8 and will announce formal construction plans in the coming months.

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Alberta Construction Magazine | 13

nuts & bolts

CALGARY INDUSTRIAL LOT REBORN AS CITY’S NEWEST PARK Located on the Elbow River, ENMAX Park will offer a new home for the Calgary Stampede’s Indian Village.

Work begins on southeastern Calgary’s $193-million rec centre 14 | Fall 2016 albertaconstructionmagazine.com

be buried underground. To support the Indian Village, a 6,200-square-foot refurbished administrative building and new performance stage were incorporated in the project as well. As part of the landscaping, 200 trees and 800 shrubs were planted.

Drawing upon the site’s history as a First Nations camping ground, the park will serve as

With site preparation work wrapped up, construction of Calgary’s new Seton Recreation Facility has now begun.

Located in southeastern Calgary, the 330,000-square-foot facility will offer a wide variety of amenities. There will be two multi-purpose ice rinks and three gymnasiums, sports and leisure pools, and a surf simulator. While built and owned by the city, the facility will be operated by the YMCA through a partnership model.

the new home of Calgary Stampede’s Indian Village. The expanded space will allow the Treaty 7 First Nations to set up 26 teepees in a traditional circle formation.

The park will also feature the 650-metre Cenovus Legacy Trail, which has been conceived as an open-air museum showcasing the history of Calgary, the Stampede and local First Nations.

Additionally, there will be an art studio, a performance theatre and a youth centre, as well as a 25,000-square-foot library operated by the Calgary Public Library. The fullservice location will provide early learning spaces, program and meeting rooms, and interactive technologies.

Bird Construction is serving as general contractor on the $193-million project, which is expected to be finished in 2018.

PHOTO: CALGARY STAMPEDE

ENMAX Park, located along the Elbow River in Calgary, is now open to the public.

Over the course of two years, the area has been transformed from an underused industrial zone into a 16-acre park. Calgary Stampede unveiled the finished space early in June.

The $15-million project includes a pedestrian bridge and required electrical pylons

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nuts & bolts

IPEX has just completed a $55-million expansion of its Edmonton plant in order to produce 60-inch polyvinyl chloride pressure and sewer piping.

16 | Fall 2016 albertaconstructionmagazine.com

You know how some companies like to brag about having something big in the pipeline? In this case, the big thing is the pipeline.

IPEX is introducing 60-inch polyvinyl chloride (PVC) pressure and sewer piping to western Canada—the largest size of PVC pipe available on the global market, the company says. Previously, the largest PVC pipe offered by IPEX was 48 inches in diameter.

The Quebec-based company will be producing the pipe out of its Edmonton plant, which just celebrated the completion of a $55-million, 17,000-square-foot expansion at the end of June. The expansion, which took three years to complete, includes the installation of two new extrusion lines to help produce the larger pipe.

“Western Canada and Alberta in particular have adopted the usage of PVC for many years, so it’s just a natural transition to take it into larger sizes and displace traditional materials,” explains Travis Lutes, IPEX president and chief operating officer.

Also at the Edmonton facility, the company is researching and developing its 30-inch Bionax pipe, which is slated to be on the market in the fall. Made from biaxially oriented PVC, the pipe offers greater strength from thinner material.

PHOTO: IPEX

EDMONTON PIPE PLANT GOES BIG

nuts & bolts

PHOTO: GOVERNMENT OF ALBERTA

University of Lethbridge Destination project takes first steps The final destination is still several years off, but at least the journey has begun.

The University of Lethbridge’s major new expansion project is officially underway, thanks to an accelerated cash infusion of $125 million in the most recent provincial budget.

Overall, the province has committed $248 million to the school’s Destination project over the next five years.

Scheduled to open in fall 2019, the project includes a 36,000-square-metre science and academic building with space for 450 students. In addition to classrooms and meeting rooms, the building will also contain flexible lab space and gathering areas for students and staff alike.

Natural lighting and global ventilation will be key features of the structure, and heat recovery systems will extract up to 85 per cent of the humidity and heat from air leaving the building. This energy can then be used to pre-condition air brought into the system from outside.

Currently, between 70 and 100 workers are at the project construction site. Within the next year those numbers will rise to 300–400.

APPRENTICESHIP BOARD WELCOMES FIRST FEMALE CHAIR The Alberta Apprenticeship and Industry Training Board made history this year: for the first time in 71 years, a woman was elected chair of the board. j’Amey Holroyd will steer the board as it promotes careers in trades, sets standards and requirements for training and certification in trades and occupation programs, and advises the Minister of Advanced Education about the needs of the labour market for trades workers.

Holroyd has 17 years of experience in the industrial construction and maintenance industry and holds a trade certificate with an Interprovincial Standards Red Seal endorsement as a boilermaker.

Alberta Advanced Education Minister Marlin Schmidt (right) congratulates j’Amey Holroyd on becoming chair of the Alberta Apprenticeship and Industry Training Board.

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Alberta Construction Magazine | 17

• • • •

nuts & bolts

FORT EDMONTON SEES BRIGHT FUTURE IN THE PAST The Hotel Selkirk will be part of a $100-million expansion soon to be underway at Fort Edmonton Park.

A $100-million expansion of Fort Edmonton Park is expected to bring new jobs and year-round programming to the popular history hotspot in Edmonton’s River Valley.

The funding, $33.5 million of which will be provided by the provincial government, will be used to build the Indigenous Peoples’ Experience, expand the Johnny J. Jones Midway and the Hotel Selkirk, and build a new guest services and admissions

PHOTO: CITY OF EDMONTON

Class prepares women for ironworker careers As the first new refining project in Alberta in 30 years, the Sturgeon Refinery holds a great deal of significance for the province. But it is no less momentous for many of the individuals working on the project. Just ask any of the 11 graduates of a new all-female ironworker readiness class who began their jobs on the site at the end of May. Ramona Standingontheroad, a 35-year-old mother of five from Maskwacis, Alta., describes

area. The Indigenous Peoples’ Experience will allow the park to remain open for educational and recreational programs year-round.

The results of an economic impact study conducted by Econometrics Research detail how the park’s expansion will: • Generate an estimated 455 full-time jobs during construction, with 57 permanent full-time parkrelated jobs following completion;

the training program as life changing. Her entire working life has been spent in careers deemed non-traditional for women, like driving gravel trucks or repairing heavy equipment. But the fourweek program has set her on a new career path filled with opportunities.

“It’s time for me to pave the way and show my kids and grandkids,” she says. “I’m going to be a journeyman. I look forward to that.”

Two of the site’s main contractors, Fluor and PCL Industrial Constructors, will be employing the graduates. Women Building Futures and the Edmonton Ironworkers’ Union Local 720 handled recruitment and training, while the North West

• Increase annual summer attendance by 76,000 to 245,000 by 2021; and • Increase annual economic activity by an estimated $7.3 million locally and $23.3 million provincially.

Situated on 64 hectares in Edmonton’s scenic River Valley, Fort Edmonton Park includes more than 80 historical buildings depicting four distinct eras of Edmonton history.

Redwater Partnership covered tuition for the program participants.

According to the refinery ownership, the investment in workforce diversity is expected to pay off in a number of ways.

“We think it’s actually improving our site productivity because people see that we are a caring employer, but we also know it will increase cost efficiencies in the future,” says Doug Bertsch, vicepresident of regulatory and stakeholder affairs, North West Redwater Partnership. “As Alberta’s economy cycles and things get busy again, there will be greater demand on labour, and we think workforce diversity is a good foundation builder.”

Alberta Construction Magazine | 19

nuts & bolts

Transit garage coming to northeastern Edmonton

Construction has begun on Edmonton’s $186-million Northeast Transit Garage, which will house 300 buses when completed in 2019.

For years, the sprawling empty lot on Yellowhead Trail and Fort Road has been one of the biggest eyesores visible to Edmonton’s LRT riders. But commuters will soon have a much more interesting view.

Construction has begun on the $186-million Edmonton Transit System (ETS) Northeast Transit Garage. The project, which replaces the 55-year-old Westwood Transit Garage, is currently slated for completion by early 2019.

At 500,000 square feet, the garage is as large as 10 football fields and will have capacity for 300 buses. It will provide administrative and operational space for 700 staff, as well as a credit union. The project is aiming for LEED Silver certification.

Commuters and neighbourhood residents likely have just one question about the project: what about the chimney? The Canada Packers smokestack has long been the barren lot’s defining—and in fact, only—feature. As the last vestige of the Canada Packers meat packing plant that once occupied the site, the smokestack was awarded historical designation by the city in 2015.

According to ETS, the space around the historic elements of the site will be landscaped and will include benches, lighting and historical information panels. A sidewalk will also be built to connect the smokestack to Fort Road to ensure the area remains publicly accessible.

ALL CLEAR FOR NEW ALBERTA EMERGENCY RESPONSE SYSTEM

20 | Fall 2016 albertaconstructionmagazine.com

Department, says it played “a life-saving role” during the crisis.

“Without AFRRCS, we simply would not have been able to communicate effectively, meaning 90,000 of my neighbours, friends and colleagues would not have been able to successfully be evacuated,” he says. “Without AFRRCS, we would not have been able to respond and coordinate between 32 different fire departments and first responders who came to our aid and stayed with us during the peak of the wildfires.”

Eight years in the making, AFRRCS encompasses 332 sites across the province and cost

$438 million to build. In the past, first responders had used a patchwork of standalone local systems as well as two aging provincial systems for the RCMP and Alberta government employees. The new system brings together police, firefighters and emergency medical personnel to help improve coordination between services.

The system was designed and built by Harris Canada Systems. Ledcor handled the turn-key build portion of the network, which included site acquisition, engineering, construction, tower installation and inside plant services.

IMAGES (TOP TO BOTTOM): CITY OF EDMONTON; GOVERNMENT OF ALBERTA

Alberta’s new emergency response system has survived its initial trial by fire.

When the Fort McMurray Fire Department’s radio communications tower was taken offline by wildfires in May, the province distributed 264 radios to firefighters to connect them to Alberta First Responders Radio Communications System (AFRRCS). It was an early test for the system, which rolled out province-wide nearly two months later on July 1.

Fortunately, the system was up to the task.

Brad Grainger, deputy chief, Fort McMurray Fire

Fort McMurray Fire Department Deputy Chief Brad Grainger stands in front of a mobile radio tower that is part of the new Alberta First Responders Radio Communications System, which was used to help maintain communications during the Fort McMurray wildfires.

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Fort McMurray

OUT OF THE

ASHES THE FORT MCMURRAY CONSTRUCTION COMMUNITY PREPARES FOR THE DAUNTING TASK OF REBUILDING ITS FIRE-RAVAGED CITY e By Kiran Malik-Khan

H

ow do you put a number on a tragedy of this historic level? Try $3.58 billion. That’s the estimate of the insured property damage in Fort McMurray due to the wildfires that forced the mass evacuation of over 80,000 people from the city on May 3.

The estimate was released by the Insurance Bureau of Canada (IBC) on July 7. The damage done by the Beast, as the wildfire has been dubbed, has been “by far the costliest insured natural disaster in Canadian history…. This is more than twice the amount of the previous costliest natural disaster on record—the 2013 southern Alberta flood, which cost $1.7 billion in insurance claims,” according to the IBC’s report.

Ravaging nearly 600,000 hectares of forest, an area bigger than Prince Edward Island, the fire destroyed about 2,400 homes and buildings as it moved east toward the Saskatchewan border. Re-entry only began on June 1 and the cleanup process will take months as crews clear away debris and contaminants. Rebuilding is not a task being taken lightly by the local construction industry.

22 | Fall 2016 albertaconstructionmagazine.com

PHOTO: GREG HALINDA

Fort McMurray

Officials estimate that 50 per cent of the homes in Fort McMurray’s Abasand neighbourhood were lost to the wildfires that hit the city at the beginning of May.

Alberta Construction Magazine | 23

Fort McMurray

The Fort McMurray Construction Association (FMCA) has been helping lead these efforts by supporting construction companies and personnel, including during the challenging evacuation period in May. Within a day of leaving the city, the FMCA had set up a remote office in Edmonton. Offers of support from the Edmonton and Grande Prairie construction associations began pouring in immediately.

According to Lana Maloney, the FMCA’s executive director, much has already been done to support the association’s 160 member companies during this difficult time. The organization’s list of accomplishments during the evacuation is lengthy. The FMCA: • Worked closely with the Alberta Public Works Association by providing the FMCA’s membership list.

• A ssisted the Regional Municipalit y of Wood Buffalo (RMWB) with developing an Offers of Resources database.

• Provided members with updated wildfire information.

• A dvocated to t he prov ince on t he need for government-­b acked bridge financing to assist with cash-flow challenges.

• Established an employment opportunities section on its website (fmca.net).

• Met with the Canadian Home Builders’ Association and various MLAs from all parties.

• Worked with Wood Buffalo Economic Development to set up the Back to Business Resource Centre.

The devastation from the fire has also meant many construction projects in the area have been delayed or even suspended.

“Almost all of the projects that were currently out for tender prior to the evacuation were temporarily suspended,” Maloney says. “Of course, many of the active jobs were also suspended.”

Indeed, the RMWB council has now suspended 88 out of the 204 capital projects scheduled for the municipality this year.

Back to business Getting these projects back on track and starting the massive rebuild effort will take a great deal of cooperation between all levels of government, not just the local municipality. The association is getting ready to send a letter to local MP David Yurdiga to ask for his assistance in establishing federally backed no-­interest loans to support local businesses struggling with cashflow issues related to both the wildfire and the economic downturn.

Many smaller and medium-sized businesses in particular will likely need a wide range of supports to get back on their feet. Led by Wood Buffalo Economic Development, the Back to Business Resource Centre will offer a one-stop shop for resources from all levels

24 | Fall 2016 albertaconstructionmagazine.com

of government, in addition to providing office supplies and meeting spaces and offering access to insurance and business advisers to help get companies oper­ ational again.

The FMCA is one of the partners involved in the centre, which also includes the Fort McMurray Chamber of Commerce, Community Futures Wood Buffalo, the Northeastern Alberta Aboriginal Business Association and the Insurance Bureau of Canada. Working with the other stakeholders, the FMCA is hoping to host a “reverse trade show” that will showcase local businesses.

“We will also continue to monitor the decisions being made by all levels of government that may further impact the local business community,” Maloney adds.

Community comeback For Ben Dutton of the Casman Group of Companies, one of the area’s largest construction firms, the experience of watching the wildfire from afar was surreal. Dutton, the president and chief executive officer of the company, moved to Edmonton from Fort McMurray last year.

“I had spoken to one of my senior administration leaders, who said, ‘There’s nothing to worry about,’ and then everything started very quickly,” he recalls.

“It was hard to watch. It was a nightmare,” Dutton continues. “Our company didn’t lose any buildings, but 18 employees lost their residences. We immediately put the strength of the organization behind them.”

Not new to fire emergencies, Casman dealt with an incident of their own in 2012 when a millwork shop caught fire causing major smoke damage. “This is why we had a disaster recovery plan in place,” Dutton says.

“We never lost communications with our team, and our servers were safe.”

Since reopening its offices on June 13, Casman has been front and centre with restoration efforts in Fort McMurray. Over 200 workers are on the ground assisting with HVAC, smoke neutralizing and other tasks.

The nature of its business means the company should not see a loss of revenue due to the fire—just delays, Dutton says. The group will be busy with 10 major pro­ jects, including a July start on the Anzac Fire Hall and wrapping up the Jubilee Plaza in the heart of downtown Fort McMurray.

“Fort McMurray is our home. There is an emotional component involved,” Dutton says. “We are here for the community. It is absolutely essential—the community will come back.”

The trades are back in town Faiza Mann echoes those sentiments. She has lived in Fort McMurray for over a decade and co-founded Mann Builders with her husband in 2011. Since launching, the construction company has worked on over 60 houses, many custom built, although the number

PHOTO: GREG HALINDA

Suspended projects

Fort McMurray

“ IT WAS HARD TO WATCH. IT WAS A NIGHTMARE. OUR COMPANY DIDN’T LOSE ANY BUILDINGS, BUT 18 EMPLOYEES LOST THEIR RESIDENCES.” — Ben Dutton, president and chief executive officer, Casman Group of Companies

40

INSURANCE CLAIMS

MILLION BBLS

of lost oilsands production

2,400

27,000 12,000 5,000 Personal property claims

Auto insurance claims

$81,000 average

$15,000 average

structures destroyed

Commercial insurance claims

$227,000 average

1.1%

decrease in Canada’s real GDP growth due to evacuation and lost oil production (Q2 2016)

ALBERTA’S LARGEST INSURED DISASTERS (values at time of event) FORT MCMURRAY

1

2

3

4

SLAVE LAKE

CALGARY

2016 Fort McMurray wildfires

2013 Southern Alberta floods

2011 Slave Lake fire

2012 Calgary hailstorm

$3.58 BILLION

$1.72 BILLION

$700 MILLION

$530 MILLION

SOURCES: INSURANCE BUREAU OF CANADA, BANK OF CANADA

Alberta Construction Magazine | 25

Fort McMurray

“ FORT MCMURRAY IS OUR HOME. THERE IS AN EMOTIONAL COMPONENT INVOLVED.” — Ben Dutton, president and chief executive officer, Casman Group of Companies

of units built in recent years has dropped due to the economic slowdown.

Like other residents of the city, Mann has nothing but praise for the hard work of the first responders in saving so many homes, key infrastructure and the community. (Over 85 per cent of the structures in the city escaped damage, and its major infrastructure came through largely unscathed.) She stayed in Calgary during the evacuation, but her thoughts remained close to home.

“During the initial stages of evacuation, we contacted our clients and trades to ensure that their families were safely evacuated,” Mann recalls. “We offered our assistance by all means.”

Mann Builders was fortunate to not lose any property in the Parsons Creek area, where it is active in the new Heritage master-planned community development. However, the company did lose a rental unit in the municipality, and the fire has delayed the completion of all of its homes currently under construction.

26 | Fall 2016 albertaconstructionmagazine.com

But projects are already getting back on track as residents return to the city.

“Our sub-contractors and trades are all local,” Mann says. “And most of our trades are already back in town and routine construction activities have resumed.”

As a member of the FMCA, Mann appreciates how the association has been advocating the importance of using local contractors to rebuild the city. These are difficult times for those who have lost their homes, and she is eager to begin working with clients to ensure new houses are finished in a smooth and timely manner. Her company will be coordinating closely with the RMWB, insurance providers and other local businesses in the coming months as they plan rebuild activities.

“In the past, local businesses have worked together during difficult times,” she says. “We believe local businesses have the skills and resources to rebuild Fort McMurray, and we expect all will work together to achieve this goal. We are all committed to rebuilding Fort McMurray together.”

PHOTO: REUTERS/JASON FRANSON

Beacon Hill was among the Fort McMurray neighbourhoods hardest hit by the wildfires.

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THE ENERGY ISSUE

The Sturgeon Refinery’s construction strategy is all about avoiding the pitfalls of being a megaproject

By Joseph Caouette PHOTOS BY AARON PARKER

F

ew other projects in Alberta can even compare in scale to the Sturgeon Refinery, currently under construction on a site 45 kilometres northeast of Edmonton. In June, there were 5,200 workers on site as the $8.5-billion project inches toward peak construction, which it will hit at some point in the third quarter of this year. Of every other project currently being built in Alberta, only Suncor Energy’s $13.5-billion Fort Hills oilsands mine boasts a higher price tag and comparably sizable workforce.

Alberta Construction Magazine | 29

ENERGY

And yet the Sturgeon Refinery project could have been even larger than it is now. This is just the first 50,000-bbl/d phase, with two more phases of 50,000 bbls/d each awaiting sanction. Project owner North West Redwater (NWR) Partnership chose to divide the refinery into three parts to keep it a more manageable size. At the same time, it targeted—and achieved—a goal of modularizing 70 per cent of the project to keep down the number of workers on site.

“If we had not done this level of modularization—and this is only a guess—we could have had 20,000-plus people on site, which would have made labour efficiencies drop considerably,” says Doug Bertsch, vice-president of regulatory and stakeholder affairs with NWR, which is a joint venture between Canadian Natural Resources and NW Refining.

Not one project, but many Of the initial 50,000 bbls/d of bitumen feedstock, 37,500 bbls/d will be coming from the Alberta government as part of its bitumen royalty-in-kind program, with the remainder from Canadian Natural.

When the refinery begins operations in late 2017,

Construction work at the Sturgeon Refinery will be entering its peak phase in the third quarter of 2016, with over 5,000 workers on site.

30 | Fall 2016 albertaconstructionmagazine.com

its chief product will be ultra-low-sulphur diesel.

By using carbon capture technology, it will also be sending CO2 through the Alberta Carbon Trunk Line for use in enhanced oil recovery.

Currently, the project is approximately 75 per cent complete, counting on-site work, engineering and off-site module fabrication. There are over 1,000 modules being built for the project—the bulk of them in the capital region, Bertsch notes—with 60 per cent installed and the remainder standing in various states of completion at 10 different mod yards. He estimates that 3,000 people have been working on the project in fab shops.

Aside from being divided into three phases, the project’s construction is further broken down into clearly delineated units, each managed as its own separate job site by one of the prime contractors, such as Fluor or PCL Industrial Constructors. This is not so much a single megaproject as a series of bite-sized developments occurring next door to each other.

“That way the Fluors and PCLs of the world can manage their hundreds of people, as opposed to Mega-Contractor Inc. managing thousands of people,” Bertsch explains.

ENERGY

SCAFFOLDING INNOVATION Economies of scale Of course, there are reasons some still prefer to go with Mega-Contractor Inc. To capture the economies of scale that come with a massive project, NWR pursued horizontal pricing agreement on many common site services like scaffolding, potable water and transport.

Rather than allow each contractor to go its own way, the company would instead negotiate a supplier-choice arrangement on something like control valves to avoid having a bewildering array of different makes and models on each unit.

“We negotiate economy-of-scale pricing and then make those services available to each of the contractors, improving their costs and efficiencies,” Bertsch says.

According to Mike Gordon, vice-president of supply chain management, the project has 25 different supplier-of-choice arrangements, as well as seven horizontal pricing agreements for common site services. “This entire fabric knits together and provides us with seamless execution of the project from a contracting perspective,” he says.

A

ward-winning scaffolding looks remarkably similar to regular, award-less scaffolding. The difference is really all in the planning.

Earlier this year, Fluor was recognized with a Fiatech innovation award for its scaffold work on the Sturgeon Refinery. Working with scaffold provider PERI, the company devised the system for its three sections of the project—the crude and vacuum unit, the LC finer unit and the hydroprocessing unit—where it is doing everything from front-end engineering and design (FEED) work to construction and pre-commissioning.

During the design stage, two scaffolding superintendents worked closely with engineers over a period of 20 months, designing and modelling over 2,000 scaffolds—nearly 80 per cent of the scaffolding required on Fluor’s three units. Everything from design to logistics and field execution were incorporated into the scaffolding planning from the start.

“Traditionally, scaffolding has been constructed in a standard design-as-you-build approach,” explains Jack Penley, president of construction and fabrication with the company. “We’ve seen it grow over the years to about 20–40 per cent of our direct field labour hours, particularly on large-scale industrial projects.”

Call it the modularization of scaffolding. Because the scaffolding is incorporated into the 3-D models during design, attachments and support connections could be built into the structural steel during fabrication. That meant scaffolds did not have to be built up from the ground. Instead, they could be connected directly to the structure, thus avoiding unnecessary congestion at the ground level.

As part of the company’s advanced work packaging, all of the scaffolding was also bagged and tagged in advanced. Because it had been modelled from the start of the project, it could come to the work site prepackaged, with each piece given its own label to speed along assembly. Should the owner need to do any repairs or rework, it can simply use the preplanned scaffolding material list created for construction.

“We’re using this approach on 10 different projects across the globe, including mining and metals, pharmaceuticals, power, and oil and gas,” Penley says. “The project execution benefits this approach delivers are not just limited to one industry or one location, but easily transfer to other types of large-scale industry projects.”

Alberta Construction Magazine | 31

ENERGY Modules on site at the Sturgeon Refinery await installation. So far, 60 per cent of the project’s 1,000-plus modules have been put in place.

STURGEON REFINERY

BY THE NUMBERS Cost: $8.5 billion

Capacity:

50,000 bbls/d

Amount of project modularized: 70%

Modules built: Over 1,000

Workers on site: 5,200

Cranes on site: Over 100

Productivity profile The contracting strategy, however crucial, is just one tool for ensuring construction runs smoothly.

Conscious of how quickly productivity on large projects can collapse, NWR is working with a third-party auditor to review time on tools. In particular, an auditor can help pinpoint the various site infrastructure and indirect factors that drive down productivity. The company is constantly reviewing the findings and follows the auditor’s recommendations, Bertsch notes.

32 | Fall 2016 albertaconstructionmagazine.com

Some may have expected costs to go down with the economic downturn, but Bertsch notes that the unit cost of labour on the project has actually not changed significantly. What has changed is the availability of highly skilled trades. With fewer oilsands construction megaprojects around to command the best of the labour pool, the Sturgeon Refinery is seeing improved productivity as it brings on more experienced skilled workers.

Great site plan Tool times and unit costs are one way to measure productivity, but there are also less tangible factors at play. Are the workers happy? Do they actually like coming to the job? These factors also influence productivity, and the company has been working to tackle them through what it calls its Great Site plan. The goal is to make the refinery a place where people are proud to work, Bertsch explains.

Community outreach is key to this plan. When Bertsch spoke to Alberta Construction Magazine, NWR was in the midst of planning a family bar­ becue event where workers could bring relatives to the site to see the project up close. An admission of $5 per person was charged, with proceeds going

to local food banks. Similarly, the company has been recycling over 98 per cent of the project’s construction waste—including wood, concrete, steel, cardboard and plastic—and earning some extra revenue for charitable efforts in the process.

Last year, the recycled waste earned $110,000 for local seniors and educational causes.

Workers—and anyone who must travel on local roads, for that matter—also benefit from the project’s robust transportation program.

Every day, a group larger than the population of nearby Gibbons, Alta., is picked up by one of the company’s 99 coach buses and brought to site.

In total, 3,650 people take part in the companyfunded program.

In terms of reducing greenhouse gas emissions and increasing the safety of workers, the benefits of the program are obvious. Adding over 3,500 vehicles to the narrow roads in the area would create a traffic nightmare that would dwarf even the worst rush hour on Deerfoot Trail in Calgary.

But the program is paying other dividends as well, Bertsch notes.

“It’s actually a productivity factor for us,” he says. “It allows our craft workers to arrive on site stress-free and knowing that they’ve probably saved $1,100 a month in travel costs too.”

Join us

in celebrating the top construction projects of 2016

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DRINKING IT ALL IN Restoring water to Fort McMurray

I

n a community that has been a driver of economic growth within the construction industry for decades, and where countless Bird projects have broken ground, the devastation to Fort McMurray following the May wildfires had an impact on us all. But amidst the fiery chaos came an unexpected opportunity, not only for the construction sector, but for Albertans and Canadians alike to unite to help our resilient neighbours to the North.

Bird’s immediate involvement in the early stages of efforts to restore essential services to Fort McMurray cannot be understated. With no potable water to support emergency service crews, volunteers, or contractors, Bird-Nason acted quickly to help a community in need. Within 2 days of the initial engineering assessment, Bird-Nason arrived on site to analyze reservoir conditions. Within 3 days, a crew of 75 had mobilized and was diving head-first (literally) into restoring clean drinking water to Fort Mac. To minimize our impact on emergency housing provided by the Canadian Red Cross, workers spent three weeks sleeping on cots spread across an empty floor of the water treatment plant admin building until a permanent work camp was set up to house personnel and operators from the RMWB whose homes were lost in the fire. Daily food runs were made to and from Edmonton to sustain crews working around the clock, 7 days a week. Despite the challenging site logistics and long hours, our crews remained focused and made it a priority to get water services back online as quickly as possible to facilitate other critical relief efforts taking place across the City.

In total, 11 reservoirs within the RMWB potable water system were cleaned and restored as well as three reservoirs in the outlying communities of Anzac, Fort Mackay and Conklin.

At Bird, we don’t just build buildings. We build trust, we build partnerships, and we build communities. From a Bird-Nason perspective, this process has not only inspired collaboration within the RMWB, but it has also cultivated a true team effort across our company. Bird finds that our strength lies in our ability to learn from one another and utilize our unique talents and diverse skill sets to overcome even the toughest challenges. With resources supplied by both the Nason and Bird Calgary districts, and with additional help from numerous local subtrades in the RMWB, the potable water restoration project was a unified success and a true testament to the breadth of knowledge and experience we are able to draw on from across the organization to serve our local communities.

$80K ns by Total donatio es to Bird employe d Canadian Re Cross

An Unconventional Solution: A unique method implemented to clean some of the reservoirs was to use potable water dive teams who inspected the reservoirs with specialized cameras and probing equipment. With this specialized equipment and a pump, the sediment was removed from all surfaces within the reservoir including walls, floors, columns, baffle curtains, ladders and piping.

After all the sediment was finally removed, the reservoirs were inspected, then flushed three times and returned to full potable water service.

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bird.ca 403.319.0470 106, 12143 - 40th St SE Calgary, AB T2Z 4E6

SPECIAL REPORT

THE NEW PROJECT ERA Aligning capital costs with new market realities

Alberta Construction Magazine | 35

Inform.

Connect.

Grow.

About JWN The company

JWN advertisers’ name full page • fp

JWN is Canada’s most trusted provider of intelligence, analysis, information and insight into the Canadian energy industry.

Our industrial construction practice

One of our key focuses for 2016 and beyond is addressing the productivity and safety issues that have prevented the Canadian industrial construction industry from achieving consistent project excellence. Throughout the year we’ll be hosting a variety of industrial construction-focused events, covering the topics extensively in our magazines and on the industrial construction section of our website, and providing special tools and reports that will help to make our industry twice as safe and twice as productive by 2020.

Find out more by visiting jwnenergy.com Contact Wendy Ell, director of strategic partnerships, for information on sponsorship opportunities for industrial construction inititatives.

SPECIAL REPORT

SUMMARY

Executive summary Alberta’s heavy industrial construction industry is facing a crisis.

Unpredictable project management and delivery performance have reduced investor confidence to levels that threaten the marketplace.

The dramatic and continued drop in crude oil pricing has exacerbated the issue.

Industry can correct this course and become internationally competitive. Stakeholders across the project delivery chain know what needs to be fixed and have the resources to do it, but it is a challenge to pull all the pieces together.

While a number of recent major projects were successfully executed on time and on budget between 2012-15 including Imperial Oil Kearl Phase 2, Devon Jackfish 3, Syncrude Mildred Lake Mine Replacement Project, Cenovus Energy Christina Lake Phase E and Firebag Stage 4. These projects required billions in up-front investment and took years to build.

With the advent of light tight oil in the U.S., producers can achieve lower-cost investment-to-production cycle times measured in months outside Alberta.

A number of key organizations are collaborating to position Alberta industrial project delivery for success in the future. This includes GO Productivity, the Construction Owners Association of Alberta (COAA), Supply Chain Management Association Alberta (SCMA AB) and JWN. Together these organizations integrate all players along the project delivery chain into one group focused on delivering actionable solutions.

This report summarizes the challenge the heavy industrial construction industry is facing and identifies key contributors to the current poor performance. It outlines key first steps toward solutions, and the role and goals of the collaborative network. It also identifies how you, a key stakeholder, can help the industry overcome this challenge and become internationally competitive.

Alberta Construction Magazine | 37

THE NEW OIL ERA

The new oil era The dramatic and sustained drop in crude oil

The current situation may be bleak, but the

to $26.68/bbl in January 2016), sanctioning

pricing over the last two years has halted the

reality is that, even before the downturn started,

of new growth projects is not likely over for

development of major new crude oil produc-

the industry in Alberta was spiralling toward a

the foreseeable future.

tion growth projects in Canada. According

crisis as many investors were losing interest in

Oil pricing has recovered somewhat to

to the Canadian Association of Petroleum

building new Alberta projects. Although there

about $50/bbl, but experts predict it will be

Producers (CAPP), in 2016 capital spending

have been several successful projects deliv-

years before WTI returns to $100/bbl. When

will decline by $50 billion, or 62 per cent, from

ered in the last decade, these bright lights are

or if that happens, investors may view oilsands

2014's spend. It is the largest two-year decline

overshadowed by the trend toward ongoing

growth projects with a great deal more cau-

since CAPP and its predecessors started track-

cost escalation, a history and continuation of

tion because of the significant up-front costs,

ing this data in 1947.

cost overruns and schedule slippage, as well

long cycle times and execution risk.

as the emergence of U.S. light tight oil, a lower cost and a shorter cycle-time opportunity.

While Alberta’s unpredictable project management and delivery performance is most

record $81 billion in 2014. Canada’s rig fleet is

Robust oil pricing provided the incentive

prominently visible in the oilsands, this chal-

essentially idle, averaging less than 15 per cent

for well-funded oilsands producers to con-

lenge impacts all heavy industrial construction

utilization. All but the most advanced oilsands

tinue investing in major growth projects in

in the province. Investment uncertainty

construction projects in flight before the price

recent years, but with WTI dropping as much

extends to petrochemicals, refining and other

drop have been placed on hold indefinitely.

as 70 per cent (from $107/bbl in June 2014

value-added oil and gas products.

38 | Fall 2016 albertaconstructionmagazine.com

PHOTO: CENOVUS ENERGY

Oil and gas capital investment is forecast to decline to $31 billion in 2016, down from a

SPECIAL REPORT

THE NEW OIL ERA

Significant reductions in new growth capital spending CAPITAL INVESTMENT IN THE UPSTREAM SECTOR (BILLIONS) conventional

oilsands

$21

$21

$24.9

$23.2

$33.9

$43.2 $30.8

$27.2

$22.7

$17.2

$39.6

$40.3

$35.6 $11.2

$10

$18.1

$18.1

$20

$22.3

$31.6

billions

$30

$36.3

$40

$47

$50

$0 2007

2008

2009

2010

2011

2012

2013

2014

2015

2016 SOURCE: CAPP

TOTAL ADDITIONAL CAPACITY OF OILSANDS PROJECTS BY YEAR annual volume in millions of barrels per day

previous expected growth that has been delayed or cancelled

capacity growth under construction today

new operating capacity since 2012

expected growth that is tenuous

1.0

additional capacity (mmb/d)

0.8

0.6

0.4

0.2

0 2012

2013

2014

2015

2016

2017

2018

2019

2020

SOURCE: ARC FINANCIAL

Alberta Construction Magazine | 39

OPTIMIZATION FOCUS

SPECIAL REPORT

Focus on maintenance, repair and operations, optimization, small capital and sustaining capital projects The silver lining for the oilsands industry

spending will grow at 10 per cent com-

and its suppliers through the downturn is

pounded annually. At the same time,

the approximately 2.5-million-bbl/d installed

producers will increase investment in

base of production capacity that continues

s m a ll c a p it a l a n d su s t a in i n g c a p it a l

to be operated and optimized to improve

projects by 1 0 per cent compounded

efficiency and reduce costs.

annually.

Additionally, major growth projects in

MRO outlay is expected to see the great-

flight before the deterioration of oil prices

est growth in total spend over the near term,

will be completed, adding more than 765,000

approaching $25 billion in 2017. This repre-

bbls/d of new production capacity by the

sents an increase of nearly $10 billion from

end of 2017. JWN analysis indicates that, as

2013. Meanwhile, total investment in small

new assets come online, oilsands production

capital and sustaining capital projects is

will increase to approximately 3.02 million

expected to increase from $9.5 billion in

bbls/d by 2020. Correspondingly, produ-

2014 to $14.1 billion in 2017.

cers are expected to increase their spend on

Improving project delivery on these

maintenance, repair and operations (MRO).

smaller ventures will go a long way to boost

Proprieta r y m o delling shows that

investor confidence in new growth when oil

between 2014 and 2017, annual M RO

pricing recovers.

Cost reduction pressures JWN analysis has found that Cenovus Energy

reducing costs by as much as 40 per cent.

is characteristic of the industry in its view that

Many companies have done so, in part, by

costs must be reduced by at least 40-40-40

reducing staff.

in order for the oilsands industry to regain its

The call to reduce costs presents a signifi-

competitive edge and grow. This means a 40

cant challenge as many service and supply

per cent reduction of capital costs, a 40 per

companies already operate on thin margins.

cent reduction of operating costs, and a 40

It has also increased the threat to domestic

per cent reduction of general and adminis-

players that offshore competitors may be

trative costs.

viewed as more cost-effective.

The prevailing view of the industry that

Many service and supply companies are

costs must come down dramatically on all

clear that they believe collaboration and

fronts is exerting significant pressure on

improved productivity are the keys to overall

service and supply providers to comply by

cost reduction instead of one-time pricing cuts.

40 | Fall 2016 albertaconstructionmagazine.com

SPECIAL REPORT

MRO

sustaining capex

MINING/UPGRADING MRO, SMALL PROJECT AND SUSTAINING CAPITAL SPEND MRO

small project capex

sustaining capex

small project capex

$23 $14.1 $12.4

$1.5

$1.5

$1.4

$6.6

$9

$6.2 $5.8

$1.9 $2.7

$6.4

$4.4

$5.2

2014

2015E

2016E

$17.2

CDN dollars (billions)

CDN dollars (billions)

$15.8

$1.9 $3

$1.4

$19.5

$18.2

$4.6

$1.4

$1.2

$4.3

$3.9

$17 $12.3

$7.7

2017E

2014

$13.1

$13.8

2015E

2016E

2017E SOURCE: CANOILS

REMAINING NEW OILSANDS PROJECTS UNDER CONSTRUCTION

OPERATOR NAME

PROJECT NAME

PHASE NAME

TECHNOLOGY DESCRIPTION

STATUS

CAPACITY

YEAR PRODUCTION START

Brion Energy Corporation

MacKay River

Phase 1

SAGD

UC

35,000

2015

Reportedly mechanically complete; steam injection to begin summer 2016

Canadian Natural Resources Limited

Horizon

Phase 2B

Mine/ Upgrader

UC

45,000

2016

Early Q4/2016 commissioning

Cenovus Energy Inc.

Christina Lake

Phase F

SAGD

UC

50,000

2016

First oil expected Q3/2016

Cenovus Energy Inc.

Foster Creek

Phase G

SAGD

UC

30,000

2016

First oil expected Q3/2016

Japan Canada Oil Sands Limited

Hangingstone

Expansion

SAGD

UC

20,000

2016

Q3/2016

Canadian Natural Resources Limited

Horizon

Phase 3

Mine/ Upgrader

UC

80,000

2017

Q4/2017

North West Upgrading Inc.

Redwater Upgrader

Phase 1

Upgrader

UC

50,000

2017

Q3/2017

Suncor Energy Inc.

Fort Hills

Phase 1

Surface Mining

UC

160,000

2017

First oil expected Q4/2017 SOURCE: OILSANDS REVIEW

Alberta Construction Magazine | 41

OPTIMIZATION FOCUS

IN SITU MRO, SMALL PROJECT AND SUSTAINING CAPITAL SPEND

2016 OUTLOOK

SPECIAL REPORT

2016 oilsands industry forecast survey Industry sent a clear message about the need

suppliers. The vast majority of respondents

productive and operationally efficient mind-

for cost reduction and productivity improve-

(more than 70 per cent) identified as presi-

set. Additionally, the focus of work in the

ment when JWN conducted its 2016 oilsands

dent or owner, executive, director, manager,

oilsands in the near term will be on opti-

industry forecast survey earlier this year.

senior adviser or technical adviser.

mization and sustaining capital projects,

JWN received insights from individuals

JWN found that both producers and

which is where most producers expect to

across the oilsands market spectrum; 30 per

suppliers are feeling cost pressures, but

spend and most suppliers expect to find

cent were producers and 70 per cent were

that both groups are shifting toward a more

opportunities.

WHAT ARE YOUR MOST SIGNIFICANT GROWTH OPPORTUNITIES IN THE OILSANDS? (Suppliers only)

DOES YOUR COMPANY PLAN TO INVEST IN MAJOR PLANT DEBOTTLENECKING OR OPTIMIZATION WITHIN THE NEXT THREE YEARS? Nearly half of survey respondents indicate an expectation for investment in major plant debottlenecking or optimization projects within the next three years, although nearly half of survey respondents are unsure. (Producers only)

Sustaining capital

42%

projects

yes

14%

15%

Optimization

14%

projects

no

N/A

unsure

New service lines

44%

11%

15% 3% 5%

Engineering

Maintenance projects

Construction Debottlenecking projects

9% 5%

8% 7%

7%

Maintenance

Research and Fabrication development

IN WHICH AREA DO YOU FORECAST TO BE THE SOURCE OF PRODUCTIVITY IMPROVEMENT WITH THE GREATEST IMPACT? Half of survey respondents believe that the key to productivity improvements lies in business process improvement. producer

supplier

57 % 48%

17 %

business process improvement

22%

skills and training – human capital

7%

11% other

4%

13%

machinery and equipment/tools

15%

6%

information technology – hardware and software SOURCE: OILSANDS REVIEW

42 | Fall 2016 albertaconstructionmagazine.com

PROJECT DELIVERY

The current state of project management and delivery Even before the downturn began in 2014, it

certainty that projects will be delivered on

have continued to characterize the develop-

had become widely recognized that oilsands

time and on budget.

ment of new oilsands projects into the 2010s.

projects, large or small, need to be delivered

JWN analysis indicates that the capital cost

While costs have come down since 2014 as

more effectively to boost investor confidence

to build an oilsands project has increased by

producers and suppliers navigate the ongoing

and funding. This includes the need for both

more than 70 per cent since 2000. Massive

low oil price environment, new major project

a significant reduction in costs and improved

cost and schedule overruns in the early 2000s

development is still off the table.

Alberta compared to U.S. project delivery performance JWN’s review of data collected by the

COAA found that while Alberta pro­ject

Construction schedule growth in Alberta

Construction Owners Association of Alberta

performance generally improved in the period

averages 17.5 per cent (ranging from -100 per

(COAA) indicates that Alberta projects have

2010-14 compared to 2006-09, overall cost and

cent to +140 per cent), compared to the aver-

considerable opportunity for improvement

schedule performance is poorer than in the U.S.

age in the U.S. of 0.7 per cent (ranging from

compared to the those completed in the U.S., the province's key industrial competitor.

Project delivery predictability in cost and

-70 per cent to +95 per cent).

schedule growth is one of the problems in Alberta.

Despite Alberta’s averages being behind

In 2014, COAA compared its Alberta

Consider that Alberta construction cost growth is

the U.S., both regions deliver 25 per cent of

project benchmarking database to pro-

on average 24.8 per cent (ranging between -40

projects under budget and ahead of schedule.

jects completed in the U.S. These projects

per cent to +150 per cent) compared to the U.S.

Focusing on better predictability, Alberta can

include a variety of upstream, downstream

construction cost growth average of 1.7 per cent

deliver highly effective projects and make the

and pipeline installations.

(ranging between -60 per cent to +100 per cent).

industry internationally competitive.

Alberta Construction Magazine | 43

PRODUCTIVITY

SPECIAL REPORT

Factors that impact productivity In 2014, University of Calgary Schulich School of Engineering professor and project management expert George Jergeas developed the white paper Performance Challenges of Mega Capital Projects, which includes a detailed review of the key factors impacting productivity in Alberta. JWN found that these factors can be categorized into four areas: risk management, collaboration, scope/front-end planning, and skills and competencies.

RISK MANAGEMENT

SCOPE/FRONT-END PLANNING

• Large project size

• Unclear scope/objectives

• Inadequate risk assessment

• Poor scope management

• Onerous legal contracts

• Incomplete front-end planning

• Deceptive low bidding

• Compressed or aggressive schedule

• Biased risk management

• Incomplete contracting strategy

• Complex new technology

• Incomplete project execution plan • Incomplete contingency plan

COLLABORATION

• Uncontrolled scope creep

• Ignored lessons

• Incomplete engineering design

• Poor communication

• Low contingencies

• Distrustful project culture

• Rework and changes

• Incomplete transfer of information

• Insufficient modularization

• Poor stakeholder engagement

• Late material delivery

• Poor project management skills • Slow decision making

SKILLS AND COMPETENCIES

• Lack of innovation

• Inadequate staffing

• Mishandled claims and disputes

• Unsatisfactory contractor selection

• Team conflict

• Unsatisfactory productivity

• Undefined lines of authority

• High worker turnover

• Poor interface management • Poor governance, oversight, support • Poor monitoring and control • Poor construction management

44 | Fall 2016 albertaconstructionmagazine.com

PRODUCTIVITY

The main offender: Insufficient design completion prior to construction Research shows that the main factor

cent engineering design completion

its overall cost to increase by as much

that contributes to poor project man-

prior to the start of construction com-

as 150 per cent. On the contrary, pro­

agement and delivery in Alberta is

pared to an average 75 per cent in the

jects with 65 per cent or more design

projects going into the construction

U.S. When more of the design is com-

completion before construction starts

phase well before the design is com-

pleted before construction begins, the

can expect costs to come in at or below

pleted. This problem is clearly illustrated

project tends to have less construc-

budget, with overruns of less than

by a comparison between projects exe-

tion phase cost growth.

50 per cent when they do occur. An

The COAA database shows that a

optimum value can be found at approxi-

JWN found in COAA’s 2014 data

project with 30 per cent design com-

mately 85 per cent engineering design

that Alberta pro­jects average 55 per

pletion before construction can expect

completion prior to construction.

cuted in Canada and the U.S.

RELATIONSHIP BETWEEN CONSTRUCTION COST GROWTH AND PERCENTAGE OF ENGINEERING DESIGN COMPLETE BEFORE THE START OF CONSTRUCTION

construction cost growth (%)

2

1.5

1

0.5

0 20

40

60

80

100

120

-0.5 percentage of design complete before construction SOURCE: COAA

Alberta Construction Magazine | 45

COLLABORATIVE NETWORK

SPECIAL REPORT

The role of the collaborative network Individual teams and companies may want to

by the development and subsequent imple-

representation from all levels of the project

improve, but every part of the project deliv-

mentation of best practices and bringing new

delivery value chain.

ery chain needs to work together to be more

ideas to the table.

aligned and more competitive.

PAAD has pilot projects underway in four

These best practices are available for free

A number of key organizations in Alberta

on the COAA website.

priority areas—risk management, collaboration, competencies, and scope definition and

are collaborating to achieve industrial

COAA best practices fall under five critical areas

front-end loading—to address the key issues to

construction excellence and international com-

of heavy industrial construction and maintenance:

improve on project delivery as seen on page 10.

petitiveness through widespread application

• Safety;

of best practices, improvement of productivity

• Workforce development;

JWN

and innovation, and increased safety outcomes.

• Construction performance;

JWN provides information, content, data, ana-

These organizations include the COAA, GO

• Contracting; and

lytics, research and marketing services for the

Productivity’s Project Alignment and Delivery

• Workforce demand.

energy and construction sectors in western

(PAAD) group, SCMA AB and JWN.

Canada. Through its varied tools, JWN has

GO PRODUCTIVITY

reach into virtually every major energy pro-

be Twice as Safe and Twice as Productive in

GO Productivity, a non-profit corporation work-

ducer or owner in Alberta and thousands of

2020. Go Productivity through PAAD sup-

ing alongside Canadian businesses to build their

contractors and service and supply companies

ports COAA 100 per cent in this and will show

internal capacity to reduce waste and increase

in the industry. JWN is providing communica-

as well that Alberta project delivery is inter-

profits, is helping to sustain and build Alberta’s

tions services for the partners in the industrial

nationally competitive in 2020.

and Canada’s places in the world market.

construction productivity initiative.

COAA

by GO Productivity.

The COAA call to action is that Alberta will

PAAD is a multi-stakeholder group formed

JWN’s goal is to facilitate the successful implementation of construction best practices

COAA works to stimulate positive change in

PAAD is working to facilitate project deliv-

by delivering solutions and related content to

the drive for safe, effective, timely and pro-

ery improvement with a lead-by-example

the market through various integrated med-

ductive execution through its shared vision

approach. PAAD’s goal is to demonstrate best

iums, including print and digital content, case

between owners, contractors, labour provid-

practices to enable successful commercial

studies, webinars, seminars, research, social

ers and governments. COAA achieves this

implementation using a large network with

media and conferences.

COAA

CII

PAAD

industry leaders

JWN GO Productivity other suppliers

SCMA

best practice development

46 | Fall 2016 albertaconstructionmagazine.com

demonstration projects

marketing & implentation

  

IMPROVEMENT

SPECIAL REPORT

Before Alberta can realize major improvements in project management and delivery, companies must first master the basics. Unfortunately, many companies along the pro­ject delivery chain still have significant room for improvement in this area.

A critical piece is the level of design completion before project construction begins. JWN analysis has found that, even if the overall schedule is impacted, project teams are better served to delay construction until engineering and materials are available. Some operators in Alberta have already started implementing this and have found substantial success.

STAGE GATING Effective stage gating is a basic but highly powerful project management tool that

FIVE-STAGE PROCESS MODEL STAGE 1

STAGE 2

appraise

select

can significantly increase project cost certainty and improve delivery.

STAGE 3 define

satisfy certain criteria prior to moving on. By thinking in terms of stages, owners can







The stage-gate approach used by most project owners has a number of phases.

At each phase, the project team must go through a stage gate where they have to closely monitor deliverables and planning as the project moves through its life cycle.

Owners intend to have a much better definition and assessment of project size, scope and complexity before sanction. The stage-gate approach is expected to

STAGE 4

operate

execute



STAGE 5

improve the precision of cost estimates from approximately 30 per cent to approximately 10 per cent before taking the project forward for approval.

The model on the left depicts a typical five-step process—the first three steps are the front-end load phases of the model.





ADVANCED WORK PACKAGING Advanced work packaging (AWP) is the first industrial construction best practice that is being implemented through the collaborative network. Developed in Alberta by COAA,

ADVANCED WORK PACKAGING

this best practice has been successfully implemented by the Construction Industry Institute (CII) and is used across North America, but not yet used effectively in Alberta.

AWP is the extension of front-end planning across the project life cycle. It is a disciplined process to overcome problems resulting from a fragmented and spe-

WORKFACE PLANNING

cialized industry that emphasizes construction requirements.

Traditional workface planning begins late in the detailed engineering phase before construction begins. It deals only with installed work packages (IWPs) during con-

project setup



interactive planning



CWPs EWPs

IWPs

struction, commissioning and start-up.

In contrast, AWP starts at the initial project set up, and through interactive planning, guides the project through construction work packages and engineering work packages before construction and IWPs.

front-end planning

detailed engineering

construction commissioning start-up

JWN’s analysis of CII/COAA project research shows a 25 per cent improvement in productivity and 10 per cent reduction in total installed cost when AWP is implemented. Further research validates a consistent improvement across productivity, cost, safety, schedule, quality and predictability when AWP is implemented.

Implementers of AWP recommend that this benefit be weighed against a commitment to invest approximately one to two per cent of a project to set up systems to support AWP processes.

Alberta Construction Magazine | 47

BACK TO BASICS

The first step: Getting back to basics

TELL US YOUR STORY

SPECIAL REPORT

How you can make a difference TELL US YOUR STORY As key stakeholders in Alberta’s energy industry, we strongly encourage you to explore how improved project management and delivery practices can strengthen your business and your bottom line.

We want to understand how your organization is addressing project management and delivery challenges. JWN is conducting a 20-question survey to assess the breadth and depth of project management solutions currently being used by industry. The results will be published in a future report.

Look above and beyond internal processes. Compare your organization to its peers and consider past projects. Suppliers, tell us about your customers. Owners, tell us about your suppliers. Where are or were the flaws?

WE WANT TO KNOW WHAT YOU THINK • Do you agree that these issues are a problem for Alberta’s oil and gas industry?

• How much are you being affected by these issues?

• What are you doing to resolve them?

• Have you been successful? If not, what is stopping you, and do you need help?

• Are you aware of the solutions available?

• Do you know how effective these solutions are?

• Is there a communication gap between various layers of project governance?

Access the survey here: jwnenergy.com/ProjectDeliverySolutionSurvey.

One lucky winner will be drawn from the survey respondents for a Visa gift card.

CONCLUSION Alberta can brighten its future outlook when it comes to major project development, primarily in the oilsands but also extending into petrochemicals and other value-added products.

The low oil price environment has exacerbated the already increasing challenges of cost escalation and poor project delivery performance.

Alberta’s industry can correct this course and become internationally competitive. We know what needs to be fixed (front-end planning, applying lessons learned, project management), and we have the resources to do it (COAA best practices, our people).

You can help by taking part in our survey, which will help the collaborative network form its future programming. You’ll also have a chance to win a Visa gift card.

FOR MORE INFORMATION GO Productivity: goproductivity.ca

JWN: jwnenergy.com

PAAD: projectdelivery.solutions

Supply Chain Management Association Alberta:

Construction Owners Association of Alberta:

scma.com/ab

coaa.ab.ca

48 | Fall 2016 albertaconstructionmagazine.com

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commercial

A glut of office space in downtown Calgary dims prospects for future commercial construction in the core

By Tricia Radison

IMAGE: TELUS

ver the last decade, cranes and construction sites have been seemingly permanent fixtures in Calgary’s growing core. Millions of square feet of office space have been constructed, keeping the cash rolling in and builders busy. But that’s all changing, and even though no one can say for sure, it looks like it could be a while before any new projects get off the ground.

According to Cresa Alberta, there’s more than 9.1 million square feet of office space available

Alberta Construction Magazine | 51

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in the core plus another two or three million square feet of what’s called “ghost space”—space that companies aren’t using but also aren’t placing on the sublease market. Officially, the vacancy rate is around 22 per cent, but including the unknown amount of ghost space places the rate is closer to 26 or 27 per cent.

A quarter of the core is sitting empty “The amount of ghost space is significant to the market because it belongs to those companies that are in the strongest position to grow when the commodity cycle rebounds, but in order for them to change the posted vacancy rate they need to fill all their ghost vacancy before they have any need to go to the secondary market,” says Adam Hayes, principal and broker, Cresa Alberta.

It all adds up to about a 15-year supply of space. However, Hayes points out that Calgary has seen years when the absorption rate has gone up from its average of 600,000 square feet a year to around two million square feet a year. The current glut doesn’t necessarily mean it will be 15 years before more development is required.

“It’s just that even if Calgary were to go on a bull run for say the next four or five years, it would take that amount of annual absorption to get vacancy back to pre-crash levels,” he explains.

IMAGE: DIALOG

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When complete in 2017, Brookfield Place will add 1.4 million square feet of office space to the downtown Calgary market.

More space to come These numbers don’t include three towers yet to be completed.

Manulife Financial Real Estate’s 707 Fifth Street project will add another 564,000 square feet and Brookfield Place will bring another 1.4 million square feet online when both are completed in 2017. In 2018, Telus Sky will add 430,000 square feet. That will likely be the end of cranes and construction for a while.

“Now until at least 2018-19, there will be very few groups with a risk threshold or the confidence in the Calgary market to put a shovel in the ground and build anything on spec, so I don’t think you’ll see any spec development in the next number of years downtown.

Thereafter it is all market driven,” Hayes says. “We think everyone should get pretty comfortable with the way the skyline looks in 2018 because it may not change much in the near term.”

The three up-and-coming buildings have anchor tenants, but the lease agreements were entered into several years ago when com­ panies were making real estate transactions based on a fairly aggressive growth cycle and corresponding staff counts. Today, growth plans have become contraction plans, and companies are subleasing space as their staffing counts dwindle. It will also be difficult to get new tenants willing to pay build-out costs when they can take Alberta Construction Magazine | 53

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advantage of recently completed improvements by simply moving into vacated space.

“In addition to the space that is yet to be leased, it’s likely that we are going to see some of the new development space come to market for sublease over the next couple of years, which will continue to buoy vacancy at relatively high levels,” Hayes says.

Industry opportunities According to Sandy McNair, data curator at Altus Data Solutions, companies in other Canadian cities have increasingly been looking to get into new space that allows them to better attract and retain talent while reducing occupancy costs per employee.

“That means that the number of workers in a building or on a floor will increase. The energy industry in Calgary has been quite generous with office space to date, with averages running around 300 square feet per person, some as high as 400.

In other markets—Vancouver or Toronto—those numbers might be 200 all the way down to 100 square feet per person,” McNair says. “To do that, you need to be in better space that can accommodate this far more intense use.”

telus sky Office space: 430,000 square feet­­­ Floors: 58 Anchor tenant: Telus LEED target: Platinum Completion: 2018 Tower tidbit: The transition from offices in the lower half to residential units in the top half is marked by the Telus Sky’s unique curved design.

brookfield place

IMAGES (TOP TO BOTTOM): TELUS; DIALOG

Office space: 1.4 million square feet Floors: 56 Anchor tenant: Cenovus Energy LEED target: Gold Completion: 2017 Tower tidbit: At 247 metres in height, Brookfield Place has surpassed the Bow as the tallest building in Calgary.

McNair believes that this will start happening in Calgary, placing additional pressure on the already soft market. But it could mean renovation opportunities for industry as companies begin looking to move into space that better meets their needs.

“In a more stable economy, most decision makers would rather not move. However, if the world is changing under your feet, it can be a significant opportunity to reconfigure and reimagine how you do business, who you do business with and where you do business from,” he says. “I suspect there will be a continuing quiet period and then it will get busier. We might not see incremental demand increases but a little more velocity and churn as tenants fit themselves into more appropriate spaces with strategies that align with their current approach to organizing their business and to succeeding in this new world.”

Industry might also want to invest in research and development to help building owners overcome a major challenge—upgrading their spaces.

Because of the noise and dust inherent to the construction process, it’s difficult to renovate while keeping tenants, which will be essential in the current market.

Alberta Construction Magazine | 55

COMMERCIAL

How much space has been added?

Some big buildings have been added to Calgary’s skyline recently, but this isn’t actually the biggest commercial construction boom the city has seen.

According to Altus Data Solutions, 72 per cent of the office space in Calgary was built between 1979 and 1983 for a total of 25 million square feet in just five years. Between 2007 and 2017, 22.8 million square feet will have been added, which is 32 per cent of the total inventory in 11 years.

The most recent boom hasn’t had as dramatic an impact on the downtown core either. The early 1980s saw the construction of 64 per cent of total inventory in the core. In contrast, only 12.7 million square feet of the 22.8 million square feet of office space built between 2007 and 2017 was added to the city’s centre, making up 32 per cent of total inventory.

707 fifth street

Office space: 564,000 square feet Floors: 27 Anchor tenant: Brion Energy LEED target: Gold Completion: 2017 Tower tidbit: 707 Fifth Street has opted for an elliptical shape that will maximize exposure to sunlight and provide a panoramic view of Calgary and the Rocky Mountains.

Comparing downtown Calgary office-building booms 4.0 square feet (millions)

3.5 3.0 2.5 2.0

total office area completed each year

1.5 1.0

total office area under construction by target completion year

0.5 0 1979 1980

1981

1982 1983

“I think there is an opportunity for the owners, investors and the construction industry to figure out new techniques, work flows, technologies or strategies that will allow tenants to fall in love with a building and stay there for a long period of time,” McNair says.

3.5

Watch the numbers

3.0

Hayes says that a normalized market, where tenants and landlords have the same amount of leverage, has a vacancy rate of eight to 12 per cent. When vacancies are lower, rental rates start to rise to a point where new construction is justified. In the past, rental rates of $35–$45 per square foot or higher spurred development because tenants could move into new buildings for about the same amount of money it cost to be in existing buildings.

“That’s where you’ll start to see activity, with developers blowing the dust off their plans and thinking about the projects they’ve had on the shelf,” Hayes says.

2.5 2.0 1.5 1.0 0.5 0 2007 2008 2009 2010

2012

2014 2015 2016 2017 SOURCE: ALTUS DATA SOLUTIONS

56 | Fall 2016 albertaconstructionmagazine.com

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square feet (millions)

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Infrastructure

Back on track After fire destroyed a Mayerthorpe trestle bridge, crews worked around the clock to rebuild the crucial rail link in 20 days

PHOTO: CANADIAN NATIONAL RAILWAY COMPANY

By Candice G. Ball

Local firefighters and helicopters were already on the scene when Jim McLeod, chief engineer of design and construction at the Canadian National Railway Company (CN), learned the company’s 1,200-foot wooden trestle bridge in Mayerthorpe, Alta., was on fire on April 26, 2016.

Although the firefighters put up a valiant fight, the fire moved swiftly due to the wind direction that day. Within an hour and a half, flames completely consumed the bridge. It soon became apparent it would be a total loss.

Alberta Construction Magazine | 59

Infrastructure

As the bridge burned, the CN team began analyzing how to best restore train operations. The bridge connects to a line that runs east-west, providing rail service to forestry, energy, agriculture and aggregate customers between Edmonton and the Kaybob area. (According to Millar Western Forest Products, 10 per cent of the province’s forest products are shipped on the line.) With no detour for rail traffic coming out of Whitecourt, Alta., it is a vital connection. The fire even left railcars stranded west of the bridge.

“There’s significant traffic that comes out of Whitecourt,” McLeod says.

“With the bridge down, there was no other access for customers.”

Even while the fire still smouldered through the night, supplies were being shipped into Mayerthorpe to begin work on a replacement. CN’s engineering team first looked at the potential for a culvert-and-fill replacement, but due to the hydrology and soil conditions of the site, the team ruled out that option. They also looked at another option involving a reinforced earth wall and span. Ultimately, the team decided to do a hybrid.

CN has a supply of strategically located materials across its networks for situations like Mayerthorpe. As a result, the team used standard concrete voided double-box spans that had already been fabricated for other projects.

They also looked at available steel spans. The trestle bridge’s previous steel span, which was supported on a timber foundation, fell during the fire and could not be repaired. The team located a suitable second-hand span in Kamloops, B.C. As the fill work took place, the team repaired and strengthened the span.

“The biggest challenge we faced were the soil conditions throughout the valley,” McLeod says. “It’s a relatively soft clay, and the local fill material sourced was unsuitable for the structure. So we used granular fill out of Whitecourt.”

When McLeod initially assessed the situation, he anticipated the bridge would be out for at least four weeks. To expedite completion of the project, the CN team broke the construction down into three subprojects: east-end

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60 | Fall 2016 albertaconstructionmagazine.com

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PHOTOS: CANADIAN NATIONAL RAILWAY COMPANY

A second-hand steel span from Kamloops, B.C., was brought in to replace the Mayerthorpe bridge’s previous span, which was irreparably damaged when it collapsed to the ground during the fire.

Infrastructure

There were no safety incidents on the bridge repair project, even with crews working 24-7 on the busy site.

fill, west-end fill and bridge construction in the middle. CN and contract crews worked 24-7 to complete the project.

Mayerthorpe’s own Barsi Enterprises did the fill on the west end, while Universal Rail Systems – Frontline worked on the east end. CN crews as well as Remcan Projects undertook the bridgework.

The team completed the project in 20 days—eight days ahead of the original estimated completion time. “The success of the project wasn’t just that it was done in a very short period of time, but it was done with no safety incidents. It was a very busy, active site with a lot of equipment moving around,” McLeod says.

He attributes the project’s success—both the impeccable safety record and the speed of completion—to the contractors and CN crews all working together. “The team pulled together and worked diligently to do a quality job,” McLeod explains. “We had safety briefings before each shift—and re-briefing as the work changed on site.”

The team drove a total of 76 steel piles. Constructed from 195,000 tonnes of steel, concrete and fill material (6,500 loads), the new bridge structure is 292 feet long, with the fill portion stretching 860 feet. At 46 feet high, it stands the same height as the trestle bridge, with a total of nine spans.

On May 15, the stranded railcars finally crossed the bridge and continued on their way.

However, the story does not quite end there. The Mayerthorpe bridge fire was just one of a rash of fires in the area. The fire department responded to 18 separate incidents beginning on April 19 through April 29, 2016, in and around the town. All of the fires were deemed suspicious.

The RCMP would later charge Lawson Michael Schalm, a Mayerthorpe firefighter and the son of a former town mayor, with 18 counts of arson.

Schalm was one of the firefighters who fought the fire.

Alberta Construction Magazine | 61

Reducing exposure to silica on the job site

BY KEN GIBSON

ACA executive director

O

ccupational exposure to silica potentially affects every worker on every job site.

Alberta’s construction industry has a statutory obligation to minimize harm to their workers from occupational exposure to crystalline silica and related products, with a statutory occupational exposure limit of 0.025 grams per cubic metre of air in an eight-hour working day.

Silica and related products are found in numerous construction materials, and testing of Alberta commercial construction sites has found that the dust and debris created through numerous construction tasks (such as concrete coring or drywall sanding) has the potential to expose all trades on site to the hazard.

The Alberta Construction Association (ACA) has developed best practices for your use at albertaconstruction.net. While these practices are not mandatory, they provide guidance to members in assessing and minimizing ex­p osure to site-specific silica hazards. The association strongly urges your firm to make use of these documents and work to achieve

Alberta Construction Association

best practices to safeguard your employees and achieve regulatory compliance.

The ACA thanks the industry volunteers that created these documents. The practices are living documents and will improve with continued member input.

The association is also working with the Alberta Construction Safety Association (ACSA) to develop awareness and supervisor training for 2017. Once these practices are well established on Alberta job sites, the ACA plans to test with Occupational Health and Safety to obtain hard evidence confirming whether the current statutory limit is technically and economically feasible.

ACA silica volunteers: • D enis Poitras (Graham Construction)— committee chair • Cheyenne Bathy (CANA Construction) • J aidhir Singh Bhatti (Cemrock Concrete & Construction) • Jamie Bordeleau (Alpine Drywall) • Gordon Christensen (Professional Excavators) • Ryan Davis (ACSA) • Stacey Dziwenko (BRXTON)

• Jennifer Foster (BRXTON) • Rachel Fraser (Winwood Construction) • Gord French (Clark Builders) • Derek Hodgson (B&B Demolition) • Gary Horne (CANA Construction) • Kevin House (Chandos Construction) • Scott Izon (PCL) • Randy Januszewski (Clark Builders) • Jodi Lindsay (Waymark Group) • David Mead (Baytek Drywall & Stucco) • D ave Moodie (CanWest Concrete Cutting & Coring) • Rachelle Paley (Clark Builders) • Peter Ridder (Scorpio Masonry) • Bob Robinson (Westcor Construction) • Kevin Rome (Flesher Marble & Tile) • Chris Ruthven (EllisDon) • Frank Sharpe (K. Hansen Masonry) • J aeme Skolly (A-1 Concrete Cutting and Coring) • Blaine Tchir (Park Derochie) • Max Welz (G.R. Byer & Assoc.)

• Craig Wiltse (EllisDon) • Kevin Wolff (PCL) • Ryan Younker (Waymark Group)

SERVICE TO MEMBERS THROUGH: • Government Advocacy • Industry Practices & Partnerships

• Promotion of Careers in Construction • Public Relations

18004 - 107 Avenue, Edmonton, AB T5S 2J5 • PHONE: 780.455.1122 • FAX: 780.451.2152 E-MAIL: info@albertaconstruction.net • WEB SITE: www.albertaconstruction.net CALGARY • EDMONTON • FORT MCMURRAY • GRANDE PRAIRIE • LETHBRIDGE • LLOYDMINSTER • MEDICINE HAT • RED DEER

Alberta Construction Magazine | 63

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Calgary Construction Association pulls together in time of need

CALGARY

BY TONI CASAMASSIMA

I

CCA chair Frederick Vine presents a $100,000 donation on behalf of the association to Jenn McManus, vice-president, Canadian Red Cross Alberta/NWT, for Fort McMurray wildfire relief.

n the wake of the evacuation of Fort McMurray, panic and devastation set in when the fire levelled 2,400 structures.

Nearly 10 per cent of the city was destroyed when flames ripped through it, forcing more than 80,000 residents to flee. With only the clothing on their backs, evacuated families registered with the Canadian Red Cross for assistance. So many had lost their homes, belongings, businesses and livelihoods due to this disaster.

In response to this catastrophic event, the Calgary Construction Association (CCA) board of directors voted unanimously to donate $100,000 to the Canadian Red Cross Alberta Fires Appeal. CCA directors said that the donation would come from the association’s building reserve fund, which would have a greater impact helping those whose lives have been affected by the fires.

The CCA sincerely thanks all of its members for their support and donations to the Canadian Red Cross.

Charity classic raises $9,000!

BY TONI CASAMASSIMA

PHOTOS: CALGARY CONSTRUCTION ASSOCIATION

A

beautiful day was enjoyed by all on June 8 when the CCA hosted its 23rd Annual Steacy Easton Memorial Cancer Charity Classic Best Ball Tournament at the Country Hills Golf Club.

The tournament is held in memory of 1969 CCA chair Steacy Easton, who was diagnosed with cancer and passed away in 1993. Since his passing, the association has used this golf tournament to raise money for the Canadian Cancer Society. This year, golfers came dressed up in rainbow colors to represent the fight against all types of cancer. The best-dressed foursome went to the SKYGRiD Construction team.

To make the day even more enjoyable, golfers took photos of themselves on the course with their teammates and posted them on Instagram using the hashtag #YCLrainbowgolf. There were several entertaining photos to be enjoyed, with best photo going to DIRTT Environmental Solutions.

Winners of best-dressed team (left to right): Josh Shelton (Evolution Engineering), Kevin Heilman (Concept Group), Amey Sarvis (Edon Management) and Ross McCague (SKYGRiD).

Alberta Construction Magazine | 65

CALGARY CONSTRUCTION ASSOCIATION

There when you need it, growing when you don’t.

Business Savings Account

1.15%

1,2

Business Savings Account

0.45%

2

The best photo of the day went to the DIRTT Environmental Solutions team of Saad Fahssi, Mike Higa and Adam Stosky (left to right) carrying colleague Jordan Smed.

Bundle it with an operating account and get even more benefit. Find your nearest branch at cwbank.com/bsa and start earning today.

1

2

Interest is paid as follows: 1.10% on deposit balance to $250,000; 1.15% on deposit balance between $250,000 and $15,000,000; and 0.25% on deposit balance exceeding $15,000,000.

Rate is subject to change without notice. Interest is calculated on the daily closing balance and paid monthly.

A CWB Group Company

Clowning around with the Lear Construction Management team (left to right): Chris Grant, Greg Landry, Shawn Hammer and Jason Elvy (on the grass).

Golfers also cooled down with margaritas at the CCA’s Youth Employment Program tent.

In addition, they could take part in the Shoot to Thrill super-soaker challenge for a donation of $5 per player. Brent White of Scott Builders was the lucky winner of a new Fitbit at the challenge!

This year’s event raised a total of $9,000, of which $8,000 went to the Canadian Cancer Society. The remaining $1,000 was raised by the CCA’s Young Construction Leaders and was donated to Kids Cancer Care. The CCA thanks all the members who participated!

66 | Fall 2016 albertaconstructionmagazine.com

PHOTOS: CALGARY CONSTRUCTION ASSOCIATION

Ashley Nordin (West Air Sheet Metal) takes her best shot at the Shoot to Thrill super-soaker challenge.

CALGARY CONSTRUCTION ASSOCIATION

Making sure eco-friendly buildings are up to code

BY JADE RHYASON

Justin Pockar, energy and environmental coordinator at the City of Calgary, speaks on the new National Energy Code of Canada for Buildings (NECB).

PHOTO: CALGARY CONSTRUCTION ASSOCIATION

T

he owner, architect, engineer and contractor community held an informative session on June 29 at the University of Calgary on the new National Energy Code of Canada for Buildings (NECB).

Justin Pockar, energy and environment coordinator at the City of Calgary, started the session by noting good buildings are already meeting or exceeding the new energy code.

A co-author of the code, he also explained, “There is no better way to even the playing field in the construction industry than the NECB.” Pockar was joined by a panel of industry experts including John Souleles, Dialog; Khalil Al-Arab, Williams Engineering; Lindsay Austrom, Stantec; Paula Kerr, AME Group; Christianne Aussant, Footprint/Smith + Andersen; and Brent White, Scott Builders.

The panel outlined various changes that will need to be made by the industry once the NECB comes into effect on Nov. 1, 2016.

The NECB was developed by the National Research Council and Natural Resources Canada as part of a commitment to

471674 Graham Management Services LP 2/3v • dcv 4.975" x 9.5"

Alberta Construction Magazine | 67

CALGARY CONSTRUCTION ASSOCIATION

Panel delegates provide insight on the new NECB (left to right): Brent White (Scott Builders), Paula Kerr (AME Group), Khalil Al-Arab (Williams Enginering), Lindsay Austrom (Stantec), John Souleles (Dialog Design) and Christianne Aussant (Footprint/Smith+Andersen).

improving the energy efficiency of Canadian buildings and reducing greenhouse gas emissions. It covers a wide range of building components and systems, including building envelope, mechan­ ical and electrical systems. There are three proposed paths for complying with the code:

1. Prescriptive path: This is the simplest compliance path. It involves following the requirements of NECB sections 3.2, 4.2, 5.2, 6.2 and 7.2.

2. Trade-off path: When a design requires more flexibility, the team can trade elements within

the same part of the code that demonstrate an equivalent level of performance.

3. Performance path: This path allows for the most design flexibility. It includes a detailed envelope trade-off path and building energy performance compliance paths, which are found in subsection 3.3.4 and Part 8 of the NECB. As of Nov. 1, 2016, anyone applying for pro­ject building permits at the City of Calgary will be required to demonstrate compliance with the new regulations.

Applications submitted prior to that date will not be required to comply with the new NECB. Once a compliance path has been chosen, you can download all the compliance documents for completion and submission from the City of Calgary’s website at calgary.ca/energycodes.

This page also provides guidance on the NECB and offers answers to questions that may arise when implementing the new code.

YEP is a win-win for employers and job seekers

The CCA’s Youth Employment Program can help supply the future manpower needs of construction employers.

T

he CCA’s Youth Employment Program (YEP) is a win-win for both association members and youth that helps build the industry’s workforce. The program assists youth over the age of 16 who are looking to build productive careers in construction by matching them with an employer for a three-week paid work experience, which allows the employer to see how they perform. History has shown that over 95 per cent of YEP’s work experiences lead to

68 | Fall 2016 albertaconstructionmagazine.com

full-time employment, with the employer gaining an enthusiastic employee without having to spend time and money on recruitment.

Rather than advertising current vacancies, the employer can simply contact Toni Casamassima, CCA’s construction career development coordinator, who will be pleased to work with companies to provide the resumés of qualified applicants. The employer can then decide to interview any candidates that

interest them. There are no fees for YEP’s services, and there is no commitment to hire.

Throughout the year, YEP works diligently to recruit eager, motivated and job-ready youth. All YEP candidates are interviewed and pre-screened, have researched the trade of their interest and have completed the Construction Safety Training System (CSTS). As a result, only those with a great attitude and a strong work ethic are selected to participate.

Do you remember when you were seeking your first job? Everyone needs to begin somewhere. As an employer, you have the ability to help these young people begin their rewarding careers in the construction industry. When you decide to hire, mentor and train a youth, you can be sure that your business has skilled workers while making a difference in a young person’s life. Currently, YEP has several youth who are ready and excited to begin their construction career.

If you are interested in taking advantage of this unique opportunity and meeting these great candidates, YEP would love to hear from you! If you are currently not hiring, you can still register your company. Contact us today at 403-291-3350 or email yep@cca.cc!

PHOTOS: : CALGARY CONSTRUCTION ASSOCIATION

BY TONI CASAMASSIMA

WHERE THE WELDING INDUSTRY COMES TOGETHER

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Tendering effectively with COOLNet AlbertA

EDMONTON

BY CURTIS GRIFFITH

PHOTO: ISTOCKPHOTO.COM/RAWPIXEL LTD

Business development manager, COOLNet Alberta

L

ast year, I wrote to you about COOLNet On Demand, a powerful new bid-management tool. Invitation-to-bid and document-management tools are not new concepts, but the integration of both within an online bidding space certainly is. Currently, 40-plus general contractors across Alberta—and by extension their entire networks of sub-trades, suppliers and vendors—are realizing the potential of COOLNet to become the hub of construction procurement in the province.

It is clearer than ever that COOLNet is poised to be the single source for construction procurement

in Alberta. It is the one-stop tool for advertising, tendering, sub-tendering, viewing and bidding on construction opportunities. With this single shared resource, every stakeholder has access to every opportunity and can be confident that nothing has been missed.

With On Demand, tendering and sharing documents between contractors, subs and suppliers becomes simple. A single username and password gives you access to both your privateinvitation and public opportunities. And with online bidding through COOLNet and Etegri,

the stress and cost of bidding is reduced even further. No more clumsy FTP sites. No more fumbling around with multiple passwords and interfaces. And no more panicked dashes to tender close locations.

With each contractor that makes the switch to COOLNet On Demand, and with each owner that makes the switch to online bidding, tendering becomes more reliable and streamlined.

Greater efficiency is possible when we’re all on the same page.

Happy bidding!

Alberta Construction Magazine | 71

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LEGAL EDGE It’s pay time—do you know where your L&M bonds are?

By Tim Mavko | REYNOLDS MIRTH RICHARDS & FARMER LLP

A

labour and material payment bond, often called an L&M bond, is meant to protect subcontractors and suppliers from getting stiffed.

The idea is that a subcontractor or supplier (usually called the claimant) who provides work or supplies materials to another company on a construction project (the principal) can seek payment from the bonding company (the surety) if the principal doesn’t pay.

Not all construction projects have L&M bonds.

They are project-specific, and someone has to call for them. In bond lingo, that someone is the obligee—usually the owner or general contractor at the top of the food chain who wants a safety net for sub-subcontractors and suppliers several layers below. The obligee insists that the party directly below—with whom the obligee has a direct contract and over whom it has some control—posts an L&M bond for the benefit of those further down.

L&M bonds tend to have strict terms. An unpaid claimant must submit a claim in the required manner, to the proper parties, within the specified time. Get any of it wrong and the surety may deny the claim.

And there’s the problem. Sometimes subsubcontractors and suppliers don’t even know there is an L&M bond on the project, let alone its terms, until it’s too late. If it exists, the bond was negotiated and posted as part of a different contract up the chain, and the claimant may never have seen or heard of it. By the time a claimant learns there is an L&M bond, the deadline for making a claim may very well have been blown.

That’s what happened in the recent Alberta case of Valard Construction Ltd. v Bird Construction

Company (2015 ABQB 141), which involved an oilsands project near Fort McMurray. The general contractor hired an electrical subcontractor to do some work. In turn, the subcontractor hired a sub-subcontractor for some directional drilling. The sub-subcontractor did the drilling but didn’t get paid. It sued the electrical subcontractor and got a judgment for $660,000.

Unfortunately, the electrical subcontractor was broke.

The sub-subcontractor later learned there was an L&M bond.

The general contractor (as obligee) had required the electrical subcontractor (as principal) to obtain an L&M bond to cover payment to sub-subcontractors. The drilling sub-subcontractor (the claimant) learned this by asking the general contractor, who readily disclosed the L&M bond—once asked.

The problem was that at this point the deadline had passed for the drilling sub-subcontractor to submit its claim. Under the bond’s terms, the sub-subcontractor had to give notice to the surety within 120 days of its last day of work.

Unfortunately, it learned of the bond about a year late. The surety denied the claim.

So the drilling sub-subcontractor sued the general contractor. It alleged that the general contractor had a duty to inform the sub-subcontractor about the L&M bond. It argued that the general contractor was a trustee under the bond for the benefit of claimants and as such was obliged to search out and inform potential claimants,

including the drilling sub-subcontractor. By failing to alert the drilling sub-subcontractor about the bond, it was argued, the general contractor breached its duty and caused the loss.

But the law and the facts were against the drilling sub-subcontractor. The judge followed

Sometimes sub-subcontractors and suppliers don’t even know there is an L&M bond on the project, let alone its terms, until it’s too late. the decisions in previous cases saying an obligee must provide information about a bond when requested, but has no duty to search out potential claimants. Indeed, it would be impractical and unreasonable to expect an owner or general contractor to ferret out all sub-subcontractors and suppliers—with whom the obligee has no contract and about whom it may have no knowledge—on the outside chance that the sub-subcontractors haven’t been paid.

It’s far easier for the sub-subcontractors and suppliers to ask.

In this case, the judge noted that the drilling sub-subcontractor was a large and sophisticated company, and it was well versed in how bonds worked. All it had to do was ask, and it would have learned of the L&M bond in time.

Alberta Construction Magazine | 73

PEOPLE TO KNOW

VALUE-ADD evangelist

F

or years, Alberta premiers have been speaking about the importance of diversification in helping decrease the province’s heavy reliance on oil and gas royalties. The concept has become so often repeated it might as well be incorporated into their oath of office.

Yet progress on the file has remained slow. For one thing, building a billion-dollar petrochemical plant is particularly challenging when oilsands megaprojects are sucking up most of the province’s skilled trades and fabrication capacity. For another, there are already large industrial complexes much closer to tidewater—the U.S. Gulf Coast, for example—that tend to attract investment dollars far more readily than landlocked Alberta.

Now, with low oil prices forcing a time-out on the oilsands industry, the time is ripe for a new expansion push by the province’s resource manufacturing sector. Earlier this year, many of the key players in the local industry—including NOVA Chemicals, Williams Energy Canada and NW Refining—banded together as the Resource Diversification Council (RDC) to identify potential areas where the province could add value to its energy products. The group has also brought to the table labour

organizations like the Building Trades of Alberta and Construction Labour Relations—Alberta, as well as consultants like Stantec.

Ian MacGregor, the RDC’s vice-chair, is well positioned to help lead this fight. As president and chief executive officer of NW Refining, he is building the Sturgeon Refinery, and he has spent years preaching the valueadd gospel to anyone who will listen. In fact, the council’s members are currently building over $13 billion in projects in Alberta, he notes. If any group can offer insight into what needs to be done to bring more resource manufacturing projects to the province, this is it.

Alberta Construction Magazine editor Joseph Caouette spoke to MacGregor on what needs to be done to expand the province’s petrochem­ical and refining sectors and how the construction industry can help.

union people involved, and we thought we could form a community of interest. We all want to see Alberta become a better place and be a stronger economy.

We just got together and talked about what that meant and how we could advance the cause.

ACM: Why is there a need for a group like this?

MacGregor: We just thought it made sense to get the people that have a vested interest in the diversification of Alberta’s economy together. So there are a bunch of owner people like us, we’ve got some of the labour

ACM: There’s definitely a lot of feedstock in Alberta, such as natural gas, natural gas liquids and bitumen. Are low feedstock prices enough to move these projects forward?

MacGregor: Low feedstock prices are everywhere, not just here.

It hasn’t altered our competitive

74 | Fall 2016 albertaconstructionmagazine.com

ACM: What have been some of the challenges in the past for new diver­sification projects?

MacGregor: It’s everything from feedstock supply to cost. We’ve got to make sure we have enough feedstock that comes from the right places. We have to control the costs of conversion, so we have to figure out how we can build big processing plants cost-effectively. Then there’s how we operate them in the end to make sure we make Alberta a better place and leave the environment better when we’re done.

We tried to get people that have expertise and then said we’re going to work together to do this.

PHOTO: CHARLES HOPE

Ian MacGregor is helping lead an industry initiative to promote new petrochemical and refining developments in Alberta

advantage. What we’ve got here is a stable place to work. There are skilled people who can build things here. There are lots of en­gineers and tradespeople to build projects, and they’re pretty good at doing it. What we have to do is make the process as easy for people as we can.

Alberta has had a reputation as a pretty expensive place to build, and we’re a long way from the export markets, so we have to work on all those problems at the same time.

When we build in the wilderness with people coming from other places, it gets a lot more expensive, but I think we can actually

THE ENERGY ISSUE

“ We have to counteract this idea in the world that Alberta is a really expensive place to build things.” saries. Over the 30 or 40 years I’ve been doing this, I’ve realized we’re all doing this together now. We can’t build this plant. I don’t know how to weld, but there are lots of people here that do, and we have to get all those people focused on the real thing we’re trying to do: create lasting sources of employment and create lasting value in the economy. We’re already aligned on those two objectives, so we felt having everyone at the table was the best way to do that.

build here pretty cost-effectively.

If we make the right kind of products that are high enough value, we can transport them in many different ways. We don’t have to plug up export infrastructure with lowvalue products.

ACM: Are you pushing for any particular government policies?

MacGregor: It’s early days for us.

We just got together, and I think we’re working to define the problem and trying to figure out what lower hanging fruit we can get to easier. We’re working through that right now with our membership.

ACM: Do you have a sense of what that low hanging fruit would be?

What are some of the good potential project areas that you see out there?

MacGregor: What are the next projects that feed off of what we’ve built already? The founding members of the council are refining, natural gas liquids and petrochemicals. People in the council are spending something like $13 billion on different projects.

There’s pretty extensive activity going on right now. Probably 9,000 people are working on different projects that mem-

bers of the council are involved in. We’re leading with our chin on this one right now.

ACM: One of the striking things about this group is how you’ve incorporated building trades and consulting companies into the membership. This isn’t just a project owner group. Why was it important to get organizations like that involved?

MacGregor: I think we’ve all got a role to play. The world has changed over the last 30 years.

People who did these pro­jects used to see themselves as adver-

ACM: What can the rest of the construction community do to help encourage these projects?

MacGregor: The main thing is we have to counteract this idea in the world that Alberta is a really expensive place to build things— that it’s too expensive to think about doing them here. All of us that build things have a role to play in that. What happened is we were always living in a world where there was too much. There were too many projects to do, and everyone was wondering how they were going to do them. I think we’ve changed to a world where there isn’t enough, and that partly helps. But we have to realize that because we’re so far from the market, we need to have some real significant advantages, and costeffectiveness and how well the plants operate are part of that.

Alberta Construction Magazine | 75

PROJECT

UPDATE

EDMONTON TOWER EDMONTON, AB

BY KELLEY STARK

T

wenty-seven-storey Edmonton Tower will soon add to Edmonton’s rapidly growing skyline. With spandrel panels, marble, granite and accented features on the exterior, the tower will make a striking contribution to the city’s new Ice District, the downtown home of the Rogers Place arena. The largest tenant will be the City of Edmonton. Approximately 2,300 employees will be taking over 17 of the 27 floors.

“The decision to move to a brand new commercial tower was part of the City’s vision to invest in downtown Edmonton,” explains David Holehouse, communications manager for the City.

“Ensuring that Edmontonians have the highest-quality urban experience, with improved architecture and urban design, was a key goal leading to the establishment of Edmonton Tower.”

Currently, city employees are housed in multiple buildings.

Scott Varga, design lead for the Edmonton Tower, says, “The centralized approach of moving to a new downtown tower with a much larger floor plan will improve the potential for

enhanced communication and collaboration. Allowing for more mixing and mingling of departments and teams will ignite sparks of inspiration and solutions in unexpected ways.”

Additionally, productivity lost to travel between buildings for city employees will be reduced, and that does not even begin to address the leasing and utility cost savings that come with consolidating more employees in one location.

The tower has been designed to meet LEED Gold standards.

Builder PCL has used halogen-free electrical equipment, lowmercury lighting and high-volume fly ash as a replacement for carbon-emitting cement in concrete mixes. The building is set up to reduce energy costs from lighting, computers and equipment through daylight harvesting; rainwater harvesting will be used for non-potable applications; and green lease initiatives will be promoted with all tenants.

Amenities will include retailers, a café, a bank, and a daycare with an outdoor terrace and green roof.

01

02

03

04

05

General contractor

Budget

Construction began

Completion

Height

PCL

Over $200 million

April 2014

November 2016

131 metres (27 storeys)

76 | Fall 2016 albertaconstructionmagazine.com

IMAGE: CITY OF EDMONTON

FIVE THINGS TO KNOW

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Alberta Construction Magazine | 77

TIME CAPSULE Canadian Northern Railway Roundhouse HANNA, AB

BY CANDICE G. BALL

A

KEY FACTS

BUILT IN

1913

Decommissioned in

1961

78 | Fall 2016 albertaconstructionmagazine.com

Designated structures: Roundhouse, turntable and rail yard with the remains of railroad artifacts

Designated a Provincial Historic Resource in June

2015

PHOTO: GOVERNMENT OF ALBERTA

ny diehard Nickelback fan will be familiar with Hanna’s Canadian Northern Railway roundhouse.

The striking fan-shaped building appears in the video “Photograph,” which was filmed in lead singer Chad Kroeger’s hometown. Of course, Hanna’s roundhouse has an illustrious history that goes beyond its appearance in a rock video.

An important piece of Alberta’s railroading and transportation saga, Hanna’s iconic roundhouse remains one of the few examples of the infrastructure still standing in Canada. Most railways in Canada used roundhouses for sheltering and maintaining locomotives.

Roundhouses usually appeared at strategic divisional points that worked out to every 150 to 200 miles—the distance where railway personnel needed to rest and the locomotive required servicing.

Completed in 1913, Hanna’s roundhouse represented the divisional point for the newly built Goose Lake Line between Calgary and Saskatoon, Sask. Originally constructed as a large 10-stall, fan-shaped brick and concrete building, the shape and orientation wrapped around turntables, offering an economical use of space in constricted rail yards. Less than a decade later, the structure required an expansion, and it increased capacity to 15 stalls in 1922. As locomotives became larger, part of the roof needed to be raised in 1943, resulting in a tiered roof. Advances in locomotive technology contributed to the decommissioning of the facility in 1961, although it housed other businesses until the 1990s.

With no tenants, the structure deteriorated until residents of Hanna united to save the roundhouse. With support from the Alberta Historical Resources Foundation, the Hanna Roundhouse Society has worked to restore, rebuild and repurpose the roundhouse. During a CN retiree reunion held at the roundhouse in August 2015, the designation of the Canadian Northern Railway roundhouse as a Provincial Historic Resource was celebrated.

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ALBERTA Agland Corporation Lloydminster 780-875-4471

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Red Deer County 403-346-9011

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Lethbridge 403-329-6011

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