Steady priorities carry infrastructure projects through unstable times

Pandemic’s broadest impact on sector has been through governments spending more on infrastructure
Steady priorities carry infrastructure projects through unstable times

Many infrastructure projects take decades, not just years. Therefore, short-term trends usually do not have a dramatic impact on the result.

The pandemic, though, is not just a “short-term trend.” While its long-term impact is still unknown, it will undoubtedly have changed the result of many infrastructure projects.

The broadest impact of the pandemic has been that governments are doubling down on infrastructure spending. The pandemic has caused significant economic disruption, and infrastructure stimulus is the principal tool that governments rely on to fast-track recovery.

Spending priorities have also shifted slightly in some areas since COVID hit, like the growing interest in broadband infrastructure for remote areas. But overall, many priorities have not changed. The Canada Infrastructure Bank has said it aims to connect more households and small businesses to high-speed internet. Still, it is also committed to strengthening Canadian agriculture, helping to build a low-carbon economy and the need to “urgently address the Indigenous infrastructure deficit.”

While these broad goals thankfully do not shift year to year, project execution suffered major disruptions during COVID.

“There were construction contractors and others who weren’t bidding on projects, some bankruptcies in the sector, but also people who were withdrawing because they viewed the risk allocation as too aggressive,” says Timothy Murphy at McMillan LLP.

Parties realized that risk allocation is a tricky exercise, and if you get it wrong, a project can fail.

While change happens slowly in how projects are structured, a pause in some projects over the last two years allowed industry players to step back and revisit risk allocation in public-private partnership contracts. This has meant examining what has not worked in the past, says Samantha Cunliffe at McCarthy Tétrault. “It’s an ongoing process.”

In other words, there have been short-term delays and challenges, but the long-term effect could be a new openness to creative solutions required on the fly.  

While it is a good thing that government infrastructure priorities do not change dramatically year to year, the tools that stakeholders use must be agile. Because even when the pandemic is behind us, we will all feel its disruptive effects for many years to come.