It’s easy to only look at your current day needs with the way project procurement is currently structured. Most procurement is based on the lowest bidder to meet the project specifications, leaving little-to-no room for measures that will reduce the cost of operation and maintenance long-term, improving the quality of the structure through more resilient building materials, and make it adaptable for other uses, should the demand for the asset’s primary function change over time.
The low-bid procurement focuses solely on upfront cost, using as little money possible to build or rehabilitate an asset to meet the demands of today. It is driven by the need to minimize impact on already-stretched capital budgets, budgets that are balancing competing priorities of the need to build new to keep up with demand, and the need to maintain older assets to ensure their functionality. And in the case of municipalities, it helps create the narrative that they are providing the best value for the taxpayer dollar by only focusing the spend of what is needed, today.
However, the system is flawed, and can lead to serious financial consequences long-term.
It is not a system that values the environmental of the asset as it is procured. Depending on how it is constructed, there can be significant environmental impacts, which are rarely factored properly into a low-bid procurement due to the recognition that they will add upfront cost:
- What are the building materials being used, and how much emissions do they generate?
- How much material waste will the construction generate?
- What is the volume of carbon emissions that will be generated during construction? During operations and maintenance?
- How will the building materials be disposed of at the end of the asset’s life?
- What type of energy is powering the asset?
- How is stormwater being managed?
- How does the asset design and footprint impact the cost to heat and cool the building?
- How will the building withstand severe weather events?
These are just a few of the questions that will impact the environmental footprint of the asset, but may not be factored using the low-bid procurement methodology.
Through whole life cycle assessment, using the triple bottom line approach, assets can be created that weigh all factors of a project’s viability: social, environmental, and economic. It’s not a new concept, as many in the Canadian asset management community have been recommending this approach for years, but owners have been hampered by the constraints of tight capital budgets.
This is why the National Infrastructure Assessment presents an opportunity to fundamentally change asset procurement, be it for new or rehabilitated assets. By using the whole life cycle assessment approach, assets are built based on long-term value and usability, rather than just the immediate need. That would allow social, economic, and environmental factors to all be considered over the long-term, presenting the greatest overall value for the asset owner. Doing so also opens the door to innovation, generating solutions that can address the asset’s environmental and social impacts.
However, making this change will come at a cost, one that the government will need to consider as part of this process. While whole life cycle assessment is the right approach to asset procurement, the potential for increased upfront costs cannot be overlooked. Somehow, that money will need to be found, and that will be tough for those already struggling with the burden of asset deficits. To address this, it would be best for the federal government to consider increasing the percentage of upfront cost it covers for eligible projects, or offer additional funding directed towards lowering a project’s environmental impacts, such as funding onsite renewable energy resources, stormwater management infrastructure, and/or materials to reduce overall energy use.
The National Infrastructure Assessment presents an opportunity to address some of Canada’s greatest infrastructure challenges. With a dedicated team of industry professionals across the country, we look forward to helping the federal government execute its vision for building the Canada we want for 2050.
Visit our asset management hub page to learn more about how to best plan for the full life of your project.
Note: This article is the first in a series highlighting key themes discussed in WSP in Canada’s response to the federal government’s National Infrastructure Assessment.
