Summary from May 21 CCPPP Conference Call: COVID-19 & the Infrastructure Sector
May 21, 2020
Joining us on the call was John Beck, Founder and Chairman, Aecon Group
, who discussed the impact of COVID-19 through the lens of the construction sector.
How Aecon Reacted to COVID-19
- Aecon triggered its pandemic plan at the end of February and activated its corporate pandemic response team, which included 20 people representing all aspects of the company’s business. This enabled quick and nimble daily decision making. They met every morning to coordinate communications and actions across the company. Aecon communicated internally, as well as held constant communication externally with its stakeholders including its clients.
- The pandemic plan included communications, an oversight structure team and micro response plans for sites. Aecon also implemented a daily assurance audit to confirm daily COVID-19 requirements were in place on work sites. The company checked every site and if a requirement hadn’t been met, that part of the site was shut down until the requirement was met.
- Aecon also made sure PPE supplies were widely available on its sites and put up informational posters and other communication materials.
- In preparing its plan, Aecon captured lessons and ‘best in class’ practices from discussions with industry colleagues who were going through the pandemic in other places, such as Europe, about the impacts it was having on the business and the health of workers. The company leveraged the expertise and knowledge within the sector — it wasn't a silo approach. It wasn’t just an Aecon approach. It was the energy of the industry. Support materials from industry associations like the Canada Construction Association, the provincial health and safety associations also helped Aecon assess its early protocols and how to strengthen and adapt them. Aecon also shared its lessons learned with others.
- In fact, in some cases, Aecon may have been more conservative than the advice from public health officials. For example, initially the advice was to practice physical distancing but masks were optional. The company felt strongly masks were important and adopted their use early on. It was an important step to protect the company’s people — when physical distancing was not possible — and it proved to be the right decision.
- Because Aecon was recognized as an essential business in most jurisdictions, the company was also able to motivate businesses related to it to also develop protocols and gather required materials quickly so they could continue to operate to support them and protect their workforce. This helped create a sense of clarity and certainty in the supply chain.
- Having a pandemic plan and hearing from industry colleagues, health officials and unions on best practices enabled the company to put measures in place early that helped its workforce feel secure and confident in Aecon’s response and protocols. That was a big plus. There has been little impact on Aecon’s operations. There have been single-digit cases of COVID-19 among workers — none resulting from transmission on our sites.
- Almost all Aecon work sites have reopened.
- The safety and the health protocols, in Aecon’s view, will remain in place indefinitely. On a constant basis, they may be tweaked to further improve what has already been established.
- Also carefully reviewing the cost implications and legal implications, as well as the impacts on projects moving forward.
Aecon on Next Steps for Infrastructure
In response to questions from participants:
Ontario’s Risk Transfer Adjustments
- All levels of government are preparing infrastructure stimulus programs, such as transportation, hospitals and broadband.
- The Canada Infrastructure Bank is under new leadership and will be expected to deliver outcomes and stimulus in a timely fashion. The processes of the past may be reviewed and restructured to move forward more quickly and efficiently as far as the CIB is concerned.
- CIB may harness financial institutions to help produce revenue producing infrastructure, together with the engineering and construction industry. The bank will be there to fill those financial gaps where required.
- Recycling of existing assets in Canada may also be considered.
- There have been significant moves made by the Ontario government,
through both the Ministry of infrastructure and Ministry of
Transportation. Shifts in the risk transfer aspects of public-private
partnerships, particularly, are welcome. That is extremely important to
keep moving forward in what has been a very successful program of P3s in
Ontario. There have been other discussions in industry about what risk
transfer means and who is willing to take those risks. P3s and the
appropriate risk transfer is the right solution. It's not about changing
the model. The model is excellent. Fix the risk transfer and don't fix
- There are projects where the risk transfer might be too complex and in those particular cases the Alliance Model may play a role. I think the Alliance Model is more a solution for last resort.
Can you explain more about the Alliance Model?
- The Alliance Model has been used in the U.K., Australia and some European countries. It rarely has been used in Canada.
- It is used when the risks cannot be quantified. The risks are unknown and are significant such as renovating existing infrastructure where there may be surprises that are impossible to quantify and predict.
- Where the risks can be isolated or reasonably quantified, the [P3] models we have now work just fine.
Lessons learned to help mitigate a second pandemic wave?
- Sharing lessons learned widely with industry, stakeholders and others.
- Being up front and transparent in communications. This approach gives a lot of comfort to our employees. It’s important that every employee feel included, supported, safe and protected. Making sure they know we have their back — and that it’s a #1 priority for us — made a difference and will continue to make a difference.
Tell us more about Aecon’s pandemic plan. Did you have one in place before COVID-19?
- Aecon had a general emergency and pandemic plan. But we knew something was happening at the end of February. It happened in China and was happening in Europe. It was only a matter of time before it got to North America. And that's why Aecon organized at the end of February. It wasn’t that the company was prescient. Aecon just moved as soon as it saw the threat was coming.
How big an impact will COVID-19 have on the summer construction season?
- We're not in summer yet so the impact is unknown at this time. There has been a loss of productivity but because there's been a very low incidence of positive test results, the confidence level of the workforce is high. The work will continue right through the summer, hopefully without any more outbreaks or incidents. And if they are, they'll be contained to small parts of the industry. Aside from the loss of productivity and its resulting extra costs, it will likely be business as usual. Life won’t be back to normal but it’ll be back to a new normal.
Does Canada have enough capacity to modernize or build new infrastructure?
- Yes, Canada has the construction capacity. There are training programs today for women, Indigenous groups and for high school graduates who prefer going into the trades. The unions are also working hard at encouraging immigration for those who already have construction qualifications. In addition, Canada has had an influx of major construction companies from around the world that add capacity to our industry. The combination of all that means we can meet the demand.
Are you bullish or cautious on an economic bounce back? Where do you think we'll be in three months?
- I completely support the idea of parallelism. We need to deal with the health aspects, the protection of every citizen, to make sure it doesn't spread and at the same time we need to carefully and safely get back to work.
- I'm cautious because we don't want another major outbreak major so I fully support whatever we need to do to ensure that doesn't happen.
- A recovery in three months is a little too bullish and optimistic. But I am bullish on a gradual recovery and some semblance of back to normal by year end.
What differences or similarities do you see between this economic crisis and the one that we went through in 2008?
- 2008 was something that happened because of the major abuses and excesses of the financial system. This one is completely self-induced. The economy was very strong before we crushed it, which was appropriate because we had to save lives. But now that we are hopefully flattening the curve and coming back, the fundamentals that were there before, I think, we'll be there again, subject to the adjustments we'll all have to make to make sure the pandemic doesn't reoccur. When a vaccine appears I think we’ll see resurgence in activity. I am an optimist.
Will Aecon remain active internationally?
- Aecon is absolutely committed to the international market, as well as the Canadian market as we have been for decades. For example, Aecon is involved currently in building a new airport in Bermuda, which is a P3.
- Aecon will continue to participate in P3s around the world doing them carefully, one at a time, as we have been doing. Confident we’ll be able to continue to export Canada’s P3 knowledge and expertise.
Many global jurisdictions are looking to implement big infrastructure programs post-COVID to restart their economies. Does Aecon see opportunity there?
- Aecon has participated at the front end of infrastructure development and the development of that expertise in countries such as Bermuda, Ecuador, Czech Republic, Hungary, India etc. The company’s role moving forward will not be to compete with the existing capabilities already present in developed countries but targeting the more developing countries where the expertise we bring will be new to those countries and we will work together with them to develop those projects.
Thank you for joining the call. Our next conference call will be held on Thursday, May 28 at 1 p.m.