Ontario Construction News staff writer
What does the design and construction industry look like now?
Four Ontario industry leaders, representing different aspects of the design and construction community, offered some answers to this question last Tuesday at a panel discussion co-ordinated by The Buildings Show and MNP.
The general perspective is positive. Despite wrenching changes forced by COVID-19, some contractors, designers and developers are as busy as ever, as they adapt their businesses to social distancing requirements. But there are challenges in the air – and these won’t be solved by “shovel ready” government infrastructure stimulus funding.
Derek Goring, executive vice-president, development at Northcrest Developments, explained how his organization, working on behalf of the Public Sector Pension Investment Board is working to master plan and develop the 500-acre Downsview Airport lands site as it transitions from industrial (Bombardier) to a mixed use development.
COVID-19 has caused a requirement for everyone to work from home, and made it necessary for communication with stakeholders to be virtual rather than in person, but this isn’t stopping the massive development plans from moving forward.
Similarly, Russ Wlad, who oversees Canadian regional operations for Edmonton-based international AEC giant Stantec (with more than 22,200 employees worldwide), says the company is as busy as ever designing and planning projects – though the pandemic has changed (probably permanently) the way its employees work.
“Today, we have only about 20 per cent of our workforce that have actually returned to their offices,” he said. “We’re just finding that any inefficiencies in our production are being offset by our reduced costs.”
There are important opportunities with transitions in the energy industry and continuing discussions with clients about how “we can help move their projects forward including, you know, accessing public and private funds.”
Terry Olynyk, president and managing director, Canada, for Multiplex, says the international contractor, founded in Australia and now backed by parent company by Brookfield Asset management, is thriving.
“All of our sites are in full motion. We’re busier than ever. We’re seeing multiple requests come in for bid. And we’re seeing a very, very strong construction market moving forward in the next two to three years.”
Melissa Averio, a business advisor and partner with MNP based in London, says some of her clients are indeed experiencing challenges relating to profitability and are experiencing stress with banks because of the pandemic.
She says office space demand have declined severely with COVID-19, though rental rates haven’t declined much. The story is much more positive for industrial space. .Residential construction has rebounded after the early-covid initial slum. However, new investment in real estate has declined sharply.
One thing preventing more serious problem has been the massive infusion of federal government on COVID-19 programs, reaching $240 billion so far. “That’s more than double the amount that was spent on Canadian war production for World War II,” she said.
Averio says “we’re really witnessing banks tighten up on existing lending and potentially not approving new financing at all.”
“We’ve been helping clients report on their financial results in a more timely manner as lenders are really requiring more up-to-date financial information than they were before. And they are almost expecting close to 100 per cent accuracy in pro forma reporting.”
“We’ve been seeing lenders take much longer to make decisions as well,” she said. “So the process can be very drawn out. And unfortunately this is when cash is needed the most.”
“The increased need for up-to-date financial reporting is also exposing a weakness in many of our companies’ technology platforms or lack there of, I should say. Many of them still have manual reporting.”
Cybersecurity is also an increasingly serious problem, especially with dispersed workforces – with identity fraud scams causing serious problems for some businesses.” I’ve probably heard about 15 or 20 times with different times,” when the CFO or controller receives an email looking like it came from the shareholder, asking for a funds transfer – when it really was fraud. “And I’ve had clients who were caught by this and did actually transfer the money.”