Collaborative contracting helps bolster large Canadian infrastructure projects

In recent years, collaborative contracting has become a popular mechanism for procuring major infrastructure projects in Canada in contrast to P3s or DBFOM projects. Partner Josh Van Deurzen sat down with Canadian Lawyer to discuss the use of this latest tool.

“It's on the rise because these projects that are coming to market now are so big. In many cases, it's probably not possible to do those under the traditional contracting models,” Josh said.

As reported, Canadian Lawyer highlighted insight from a Q4 Torys Quarterly article co-authored by Josh, noting that the “parties will devise a ‘risk/reward-based payment mechanism’ in collaborative contracting to incentivize a collaborative spirit and ‘cost and schedule discipline.’ Parties receive base costs, but a portion of the contract price goes into ‘risk/reward pools’ to fund arising issues. At the project’s completion, the remainder of the pools are divided among the project delivery partners.”

With this approach, all parties share in the savings just as equally as they share in the overage if they come in over budget.

Read: Q4 Torys Quarterly: Collaborative contracting: key considerations for complex projects

“This extra front-end work devising a collaborative scheme that effectively shares responsibility, risk, reward, and decision-making power makes sense for massive, multi-year projects such as Ontario’s GO Rail expansion, Toronto’s Ontario Line subway project, and the Toronto-to-Québec City high-frequency-rail project,” Josh said.  

Josh continued, noting that the success of this model is dependent on a “collaborative mindset” approach and avoiding the application of a zero-sum or adversarial logic to the process.

You can read more about our Infrastructure work on our practice page.

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