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Infrastructure Ontario CEO Angela Clayton says productivity in the construction sector remains stagnant or in significant decline, with IO’s own projects taking much longer to complete and at a higher cost than years ago.

Clayton said during a fireside chat at the Ontario Construction Secretariat’s State of the Industry and Outlook Conference in Toronto March 5 that IO is partly at fault for the failure because it has been slow to develop incentives for builders to work more innovatively.

“Collectively, as an owner, as an industry, you look at the productivity in the construction sector, it’s been stagnant or declining for a very long time,” Clayton said.

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‘Build better, faster’

“Our goal is to build better, faster, quicker…It’s been a real challenge for us, especially the construction schedules. So it takes us on average about 30, 40 per cent longer to build the same asset today than if we were building it, say, five, six years ago.”

Clayton said the findings are adjusted for inflation and other parameters.

“We see an opportunity for us as an owner to incentivize investments in technology, in innovation, in different things within the sector, that will bend that productivity curve upward.”

Clayton, who assumed the top job at IO last July, answered questions from OCS CEO Brian Barron during the fireside chat and suggested IO has had to learn difficult lessons and change course several times over the last 20 years.

Clayton said IO has transitioned through several procurement strategies since its launch in 2005, rejecting construction management (CM) for hospital projects at its onset and embracing P3s until, she said, several high-profile P3s went “badly.”

Next came progressive and collaborative models.

“I’ll say it’s been a bit of a mixed bag in terms of the results that we’ve been getting,” said Clayton.

Today, she said, IO aims to match the right procurement model to the right project, splits up projects to minimize risk and continues to fine-tune models, recently determining it would use alliance for the first time for a greenfield hospital job, the North York General Hospital project.

“Our message to government is, there is space and place for every delivery model depending on the project needs,” said Clayton.

“We talk a lot of a lot about project segmentation. How do we take those bigger projects, split them into smaller, more manageable-size projects for the market and then sequence them?”

IO now places greater emphasis on consulting with participants in the sector at all levels to understand their concerns and needs, and Clayton said initiatives such as the annual confidence survey of contractors by the OCS are a valuable source of insights.

Metering project flow

Today IO looks to understand the broader project pipeline in the province and elsewhere, including the U.S., to understand constraints including labour supply, said Clayton. In recent years it has had to adjust project flow as it has monitored the availability of certain skilled trades.

“I’ll say for the last three to four years, we have been very intentionally metering the amount…of work that we’ve been putting into the market,” said Clayton. “At some point in 2022, 2023 it actually felt like we were competing against ourselves, like we had over-saturated the market a little bit, and we’re driving some of those constraints.”

Now, however, IO has identified an opportunity for project proponents to press forward on projects.

“I think we have a very specific window…probably the next 12 to 24 months, where there’s actually a bit of a glut in the market, and our advice to government is we should be accelerating projects, so especially small projects that are ready to go to market, could be complete in the next year, year-and-a-half,” said Clayton. “Now is the time to be taking advantage of that surplus that’s available by pushing more work into the market.”

During the question-and-answer session, Clayton said project complexity is one factor among several that has led to delays in projects.

“Adjusting for inflation, adjusting for complexity on a cost-per-square-foot basis, and looking at schedule duration, it takes longer and it costs more and that is a hard truth. So whether or not that’s labour productivity, I’m not going to speculate on that,” she said.